While 19 of the 27 EU member states have adopted the euro as their currency, as of 2022, 8 have not. These countries are:
The 19 EU member states that have adopted the euro are:
As well as the 19 EU member states that use the euro, Andorra, Monaco, San Marino, and Vatican City all use it under formal agreements made with the EU, despite not being EU member states.
Most countries that join the European Union are required to adopt the euro as part of their membership and have done so. EU countries that don’t use the euro as their currency falls into 3 categories:
Importantly, while many EU countries have seen the euro as beneficial, there has not been universal acceptance.
Currency: Danish Krone (DKK)
As we just said, Denmark is officially exempt from the requirement to join the eurozone and adopt the euro as its currency.
Following a referendum held in Denmark in the year 2000, in which the Danish public voted not to use the euro, the government of Denmark negotiated an exemption from doing so. As a result, Denmark still uses the Danish Krone as its currency.
While Denmark doesn’t use the euro, it does still participate in the European Exchange Rate Mechanism (ERM II). As part of its participation in this, the value of the Danish Krone is pegged to the value of the euro. This means that the Danish government is required to control the value of the Danish Krone so that it stays at a certain level of value relative to the euro. What this does is fix the exchange rate between Danish Krone and the euro.
Having a fixed exchange rate is helpful in many ways. However, one important result is that, with a stable exchange rate, trade between Denmark and countries that use the euro is far smoother.
Participation in ERM II and having a fixed exchange rate against euros does in some ways emulate membership of the eurozone (use of the euro). However, the situation is complicated with much debate taking place about whether it would be better to just join the euro or to maintain the current position.
Under the ERM II system, some argue that Denmark is able to enjoy many of the benefits that eurozone countries have while still maintaining an important level of independence in monetary policy.
While Denmark, under normal conditions, benefits in a similar way to being a eurozone country from the ERM II system, the independence it maintains is particularly useful in times of financial crisis. If Denmark was a eurozone member it would be forced, in times of financial strife in Denmark, to rely on the monetary policies of the eurozone, which may not work in its favour.
Others argue that participation in the ERM II system just puts Denmark in a weak position.
Under the ERM II system, Denmark is effectively forced to follow the monetary policies of the EU without having any influence on what they are. If Denmark adopted the euro and became a eurozone member, it would be able to actively participate in eurozone monetary policy according to the eurozone rules. The argument on this side is essential that Denmark would be able to benefit from eurozone membership and also manage its currency effectively as well.
Since 2011, polls conducted in Denmark have consistently shown opposition to joining the euro, although historically they have been quite variable.
Currency: Swedish Krona (SEK)
Sweden is, in many ways, in the same position as Denmark without having negotiated exemption from joining the euro.
Like Denmark, Sweden (in 2003) also held a national referendum on whether the country should adopt the euro, in which the public voted against it. However, instead of negotiating exemption, Sweden has simply avoided joining the euro. They have done this by failing to fulfill the criteria that countries are required to meet before they adopt the euro.
Before adopting the euro as the national currency, EU countries are required to meet certain criteria which are known as the convergence criteria. These criteria were originally set out in the Maastricht Treaty of 1992. Under the convergence criteria, before adopting the euro, EU member states must meet certain requirements related to:
Sweden meets all of the criteria for adopting the euro but has chosen not to participate in the ERM II system. This has been done so that Sweden is not obliged to join the Euro in order to uphold the result of the 2003 referendum.
Instead of actually participating in ERM II, Sweden has, through its central bank, followed a monetary policy that has tied the value of the Swedish Krona closely to the value of the euro. Sweden is effectively in a similar position to Denmark without actually being part of ERM II.
Sweden keeps a stable exchange rate with the euro and by enlarge follows eurozone monetary policies without being able to contribute to them. However, they maintain a potentially important level of monetary independence.
In Sweden, as in Denmark, public opinion is mixed about whether it would be more sensible to join the eurozone or to maintain the current position.
Currency: Hungarian Forint (HUF)
Hungary has failed to adopt the euro primarily due to an inability to fulfill the convergence criteria.
After joining the EU in 2004, Hungary’s then socialist government had planned to adopt the euro in a short period of time. However, a high budget deficit, a high level of inflation, and a high level of public debt meant that they were unable to do so. Despite austerity measures being introduced and other attempts being made to solve the financial problems that the country has, Hungary has been unable to join the eurozone.
As well as this, there has more recently been reduced public support for adopting the euro.
Currency: Polish Zloty (PNL)
Poland has never held a referendum on whether the country should adopt the euro, but there have traditionally been very mixed opinions on whether it would be beneficial or not for Poland to do so. As a result, Poland has avoided fulfilling the convergence criteria that would qualify the country to use the euro.
Notably, like other countries that have failed to adopt the euro, many argue that it would be detrimental for Poland to lose its monetary policy independence. Also, some believe that the low value that Polish Zloty has gives Poland a competitive advantage which would be lost if the euro were adopted.
Others point out that a deeper level of financial integration with Europe would open up a huge number of trading opportunities within the EU.
Currency: Czech Koruna (CZK)
After the Czech Republic joined the EU in 2004 there was initially a high level of support for adopting the euro. Adoption of the euro was generally seen as a beneficial move for the country and measures were put in place to work towards fulfilling the convergence criteria so that it could join.
Initially, there were delays in the process of the country adopting the currency that was expected to be overcome. However, following the eurozone crisis, support from within the country for adopting the euro has dramatically decreased. One recent poll, conducted in April 2019, found that 75% of the population opposed the adoption of the euro as the country’s official currency.
As a result, the Czech Republic has actively failed to meet the convergence criteria and, as a result, has not been obliged to adopt the euro.
Currency: Bulgarian Lev (BGN)
Despite decreasing levels of public support for adopting the euro, Bulgaria is persisting with plans to do so and looks set to meet its target of joining in 2024.
Currently, Bulgaria meets four of the five convergence criteria, with the only exception being that the country’s currency (the Bulgarian lev) has not been part of the ERM II system for two years. It did, however, join the system in July 2020 and once it has been a member for two years Bulgaria will qualify to adopt the euro.
Currency: Romanian Leu (RON)
Public support in Romania for adopting the euro has consistently been in favour of its adoption. Despite efforts being made to meet the convergence criteria, the country has so far failed to do so and, as a result, has been unable to adopt the euro.
Currency: Croatian Kuna (HRK)
Traditionally, although it has wavered in recent years, there has been a good level of support for the adoption of the euro in Croatia. On top of this, the country’s current currency, the Croatian Kuna, has been pegged against the euro for a long period of time meaning that Croatia has been closely tied economically to the eurozone for some time.
The country is actively working towards fulfilling the convergence criteria and officially intends to adopt the euro in 2023.