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02 March 2024

Poland's central bank questions euro

Worried by the global crisis, Poland's central bank (NBP) on Monday weighed the costs and benefits of planned entry in the eurozone in 2012, the NBP's head said of an official report published Monday.

"When we began work on our report two years ago, it seemed we would find a clear answer on the costs and benefits of integration with the eurozone," NBP president Slawomir Skrzypek said. "Today this question is open," he added.

He also said that the uncertainty is created by the "deepening of the crisis on international financial markets observed since September 2008, which is having an ever greater affect on the world and Poland."

Liberal Prime Minister Donald Tusk originally fixed 2012 as the target date for Poland's accession to the eurozone, but in the wake of the crisis recently admitted this date could be delayed.

As all candidates for the eurozone, Poland is required to spend two years in the ERM II exchange rate mechanism to prove the stability of its currency, the zloty. The stability of Poland's currency the zloty has been challenged since the onset of the crisis.

Despite a recent European Commission forecast predicting Poland will avoid recession and could score two per cent GDP growth this year, the zloty plummeted to 4.78 to the euro in morning trading on Monday, the lowest level for five years and a 43 per cent drop compared to exchange rates in July 2008.

Eurozone candidates must also respect the EU's Maastricht criteria regarding low inflation and public spending deficits in order to become eligible for monetary union.

Poland committed itself to joining the eurozone and replacing its currency, the zloty, with the euro as part of its 2004 European Union entry agreement. No deadline for the switch was set.