Analysts: Any Return to Slovakia’s Original Currency Costly and Painful

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(stock photo by TASR)

Bratislava, June 17 (TASR) – A potential return to the original Slovak currency, the Slovak koruna, would be extremely costly and painful for the country’s economy, economic analysts concur, adding that leaving the eurozone would result in a significant devaluation of the currency and put a crimp on economic growth.

None of the eurozone countries has yet tried to revert to its original currency, although, according to Andrej Rajcany of Across Private Investments, attempts to that end crop up from time to time in various forms. Yet the Slovak central bank (NBS) warns that the euro was purposefully designed as a one-way process. “It’s designed in this way so that potential speculation about any country’s departure from the eurozone couldn’t lead to attacks on that country,” said Martina Vrablik Solcanyova of NBS.

The potential costs of leaving the eurozone would swell also due to the fact that debts to eurozone institutions would have to be paid off in euros. “And seeing as the new currency would probably be devalued against the euro, this would bring about a steep uptick in costs related to both private and public debt management,” added XTB analyst Kamil Boros.

According to Stanislav Panis of J&T Banka, such speculation is pointless at this stage, as the process would be too complex, with great uncertainty as a natural concomitant that would significantly undermine the country’s credibility.