Possible Impacts of the Adoption of EURO on Inflation in the Czech Republic

Abstract:

The Czech Republic vowed to join the Eurozone in the Accession Agreement. According to the survey, 70% of Czechs currently have a negative attitude towards the adoption of the Euro and 63% of Czechs wish to adopt the Euro as late as possible. They see rounding prices upwards and therefore the growth of inflation as the biggest concern in the adoption of the Euro. The awareness of the benefits and drawbacks in introducing the Euro is very important, EU citizens receive most of their information from television and the Internet. Above all, the governments of the countries that are preparing to join the Eurozone should not underestimate the media and vice versa they should take advantage of their potential.

The aim of the paper is to outline the situation in the Czech Republic (hereinafter as CR) before entering the Eurozone and focus on one of the Maastricht criteria - price stability. Even though Czechs are mostly worried about the growth of price level, if the rules of recalculation and rounding are respected, then the conversion of one currency to another will not distort the original price ranges, i.e. there will not be a decline in the purchasing power of the Czech Republic population.