Romania and the euro

The previous Romanian government established a self-imposed criterion to reach a certain level of real convergence as a steering anchor to decide the appropriate target year for ERM II membership and Euro adoption.

[2][3][4] Romania has been an open economy with free capital flow since September 2006, and with total foreign trade exceeding 75% of Gross Domestic Product (GDP) (Isărescu 2007).

Romania's financial market is developing, and experts have noted a trend toward greater efficiency of stock exchange transactions.

In 2005 the new Romanian leu was printed with the same physical dimensions as the euro in order to fit the Union's automatic teller machine (ATM) system.

[7] In 2006, the Romanian government announced that the new plan to join the ERM II (a prerequisite for euro adoption) would take place only after 2012 because of significant impediments such as price instability and high interest rates.

The president of the European Central Bank said in June 2007 that "Romania has a lot of homework to do ... over a number of years" before joining ERM II.

In 2011, the Romanian government announced it would work to comply with the first four convergence criteria by 2013, but the economy would need further reforms to successfully change to the euro.

He addressed the benefits for Romania to not being a part of the euro area during the European debt crisis, but said that the country would strive to comply with all convergence criteria.

The Romanian Central Bank governor, Mugur Isărescu, admitted the target was challenging, but obtainable if the political parties passed a legal roadmap for implementing required reforms.

Ahead of ERM II entry, Romania would need to conduct monetary adjustments by finalizing the process to bring minimum reserve requirement ratios in line with Eurozone levels.

Isărescu predicted the process would take twelve to eighteen months; Romania needed to complete major economic policy adjustments by: As of April 2015, the Romanian government expressed commitment to join all pillars of the Banking Union as soon as possible, and concluded it was still on track to meet its target for euro adoption in 2019, both in regards of ensuring full compliance with all nominal convergence criteria and in regards of ensuring a prior satisfying degree of "real convergence".

[11] The Romanian foreign minister, Teodor Meleșcanu, declared on 28 August 2017 that as Romania currently "meets all formal requirements, it could join the currency union even tomorrow"; but because of a concern also to reach a prior satisfying degree of "real convergence" in order for the euro adoption not to cause negative economic harm towards pensioners and low income people, he thought Romania will only be ready to "adopt the euro in five years, in 2022".

[13] In March 2018, members of the ruling Social Democratic Party (PSD) also voted at an extraordinary congress to back a 2024 target year to adopt the euro as Romania's currency.

[17] The current national plan for adoption of the euro established a self-imposed criterion for Romania to reduce its structural budget deficit to 1% of GDP before entering ERM II.

[19] In February 2024, Finance Minister Marcel Boloș stated that even with the new more lenient EU fiscal rules entering into force starting from fiscal year 2025,[20] which he expected would extend the adjustment period for Romania and move the required exit of its ongoing Excessive Deficit Procedure (EDP) from 2024 to 2027, the implementation of some significant annual budget cuts amounting to 0.5% of GDP each year would still be required.

The EU Member States can use the derogation clause to prevent Romania from entering into ERM, and hold on to their monetary policies as a buffer against external shocks.

[29] In Romania, the main objective of the BNR is to ensure and maintain price stability while concurrently promoting the Government's general economic policy.

The Committee's present objective relays an in-depth, comprehensive analysis within the BNR and a strong relationship among board members with the heads of central bank departments, to keep them informed about the aspects related to euro adoption.

The Committee keeps its initial role as a platform for discussion because it fosters an inter-institutional dialogue to raise awareness among competent authorities about the fiscal and structural reforms necessary to provide the Romanian economy more flexibility as they changeover to the Euro.