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Last Updated: Friday, 20 May, 2005, 12:04 GMT 13:04 UK
Top Czech banker doubtful on euro
Robert Holman, Czech National Bank
Mr Holman was appointed to the central bank board in February
One of the Czech National Bank's top policymakers has questioned the merits of eurozone membership, arguing that it may damage growth.

The comments by Czech National Bank board member Robert Holman are more explicit than previous comments and may signal a policy change, analysts said.

His views may clash with board members who want the euro by 2010, whilst finding favour with Czech eurosceptics.

Analysts said other new European Union members may now voice euroscepticism.

New breed?

The Czech Republic joined the European Union in May 2004, along with nine other countries including Hungary and Poland.

The eurozone has been growing very slowly in the past five years...it could have been caused by the common currency
Robert Holman, Czech National Bank

Unusual among the new entrants, the Czech Republic has high-profile eurosceptics, most notably President Vaclav Klaus.

What has caught many observers by surprise is that Mr Holman has not only voiced this scepticism but also shifted the emphasis of what should determine euro membership for the Czech Republic.

Previous comments had focused on internal reform and fiscal discipline, but now the focus has been shifted to the economic performance of the countries that share the euro.

"The eurozone economy has been growing very slowly in the past five years, and among other factors, it could have been caused by having the common currency," Mr Holman said in an interview with Bloomberg News.

"I would not rush with euro adoption," he said.

'New twist'

Up until now, the Czech Republic has said it wanted to join the euro as quickly as possible, and would move to bring its economy in line with the eurozone.

That kind of euroscepticism has not really been seen in Hungary and Poland
Zsolt Papp, ABN Amro

Hungary and Poland have voiced similar sentiments.

Mr Holman's comments are "a new twist", said Zsolt Papp, head of East European research at banking group ABN Amro.

"It's been no secret that the Czech President [Vaclav Klaus] and the central bank were not particularly in favour of the euro.

"But that kind of euroscepticism has not really been seen in Hungary and Poland.

"I wouldn't be surprised if it was now."

Pros and cons

Pushing back euro entry would have a number of benefits, analysts said.

The central bank would keep control of interest rates and its currency, helping it to keep exports ticking over.

The government, meanwhile, could put off fiscal reforms on delicate and painful issues such as pensions and healthcare.

Opting out of the euro may however increase currency volatility and may affect how investors view the risks associated with putting money into the Czech Republic.


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