According to the United Nations, there are 44 countries in Europe. 28 of those belong to the European Union, with Croatia as its latest addition in 2013. Out of the European countries, 20 of them do not use the Euro as their currency. Some of these countries do not belong to the EU and some of those that do have "adopting the Euro" on their agenda, but not all of them. Here are some of the unique cases from all three divisions.
Norway & Denmark
Denmark is a socialized country that supports a high standard of living through substantial salaries and lofty taxes. Norway goes hand-in-hand with Denmark in many ways but one: it is not part of the EU while Denmark is, although the latter is not planning on adopting the Euro. In fact, Denmark negotiated an "opt-out" in the membership of the Euro currency section of the EU policy.
How Are They Doing so Well?
Both have highly socialized systems, free trade, and high GDPs, summing up into well-off states. Nevertheless, the buying power of their currencies is quite low, at 1 krone converting into only 11 US cents in Norway, and 16 US cents in Denmark. Prices in both countries are similar to the prices in the US for groceries, and more expensive for dining out. Salaries in both countries average at over $84,000 USD a year, higher than the average salary in the US.
Russia has one of the lowest valued currencies in Europe, at 1 ruble equivalent to 0.014 US cents. It also features relatively cheap prices for foreign visitors and a low buying power when Russians travel abroad with rubles to convert. It is also a unique case because it will "never" join the EU.
Iceland, a non-EU country, has the lowest valued currency out of the countries that are not in the EU and second-lowest out of the twenty European countries that do not use the Euro, with 1 Icelandic krona valued at $0.007 USD. Nevertheless, Icelanders’ salaries reflect Iceland as a thriving country.
What Makes Iceland Great?
A mixed economy, meaning a high level of both free trade and government intervention, works together to keep the economy stable and the country prosperous. In fact, Iceland's economy is growing faster than the US and other European countries. Some say that the Icelandic tough attitude has gotten its economy out of the 2008 slump. Although unemployment there is less than 5%, the people often work 60-70 hours a week, giving Iceland its label of being a tenacious nation.
Ukraine has long been planning on joining the EU. In fact, if a referendum took place in the near future, polls indicate it would be supported by 57% of the nation. However, this only helps Ukraine meet one of the requirements for joining the EU, in that the country must have "the consent of their citizens – as expressed through approval in their national parliament or by referendum." What stands most in the way is its weak economy. To join the EU, a country must demonstrate:
- Stable institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities;
- A functioning market economy and the capacity to cope with competition and market forces in the EU;
- The ability to take on and implement effectively the obligations of membership, including adherence to the aims of political, economic and monetary union.
Not only does the Ukrainian economy still lack the capacity to cope with competition and market forces in the EU, its willingness to adhere to the aims of political, economic and monetary union would also come under question. Lastly, its treatment of the Roma population within the country has been less than exemplary, especially after the 2018 attacks against Roma peoples that occurred around Kyiv and in Lviv.
The country is a top priority for the EU in its efforts to expand membership. Once Ukraine makes amends and shows the willingness to comply with all of the EU's standards and rules, it will have the potential to get the consent of the EU institutions and EU member states.
Romania joined the European Union in 2007, stating that it was planning to adopt the Euro by 2019. Because of the worldwide economic slump of 2008, the plan was pushed back further to 2022, and currently, the projected date of joining is in 2024, but many say this target is ambitious. Romania has significant economic challenges to make up as it is struggling to meet EU targets, and COVID-19 is not making it any easier.
Hungary, an emerging country and part of the EU, is not planning on switching to Euro, even though it has the lowest valued currency out of all European countries. Its forint is worth $0.003 USD, so its low-valued currency does not give the Hungarians much buying power when travelling abroad. Hungary's government seems to want to study the effects of Euro adoption thoroughly before deciding to make the switch, with officials having been quoted saying it could be decades away.
To be part of the Union, once the countries meet all of the conditions, it is mandatory for them to adopt the Euro. Some of the countries in the EU that have not yet adopted the Euro are waiting until their economies are ready. The transition requires a stable economy, in order for the adjustment to go smoothly for citizens, the denationalization of the currency, the changes to the banking system. Lastly, and most importantly, the ability to handle possible problems that arise in the process also requires stability.
Effects on the Economy
Currently, the countries with their own currencies have the national banking system which has the power to adjust the value of the currency and the amount of the notes printed, based on the needs of the country for various reasons, such as countering inflation. Once part of the European Union, the country agrees to be managed by the European Central Bank.
Switching to the Euro can be a tumultuous process if the economy is unstable to begin with. Some of the countries on this list belong to the EU, but have not yet adopted the Euro due do economic circumstances, including the strains added by the COVID-19 pandemic. Another economic nuance that arises when switching from domestic currency to the Euro, include the change to the banking system. Inflation becomes a risk and the most common problem for the country in the process of switching or switching too early. The EU requires a stable economic environment to begin with, in part to prepare the country for eventual adoption of the Euro.
According to the EU, adopting the Euro holds many advantages for participating countries, such as no-hassle trade, a stabilized economy and more choices and opportunities for consumers. Nevertheless, a stabilized economy through common currency can be a long-term process, especially if the country begins in a state of a weakened economy. The EU also mentions that obstacles to adopting the Euro that can break a country may include weak political commitment, varying views of economic priorities within the state, and turbulence in international markets.