Michal Horvath, chief economist at the Slovak National Bank and executive director responsible for the institution’s monetary policy, emphasized that the adoption of the euro has acted as a stabilizing anchor through several major crises. Speaking in an interview with BNR, he noted that Slovakia joined the euro in 2009, still reeling from the fallout of the Lehman Brothers collapse, and years before then-ECB Governor Mario Draghi’s famous pledge to do “whatever it takes” to preserve the single currency, which reassured financial markets.
Horvath argued that entering the eurozone at such a challenging period helped Slovakia avoid the instability that might have occurred had it retained a small national currency. “Being part of a large currency area, with influence over common policy decisions, has shielded us from major economic shocks,” he said, pointing to crises like COVID-19 and the recent surge in inflation. Beyond economics, he highlighted the political dimension, stressing that eurozone membership strengthens Slovakia’s role in Europe. “The euro has been a strong anchor, keeping us at the heart of the European project and fully involved in key decisions,” he added, noting that domestic political commitment remains crucial to sustaining this trajectory.
When asked about concrete effects of the euro, Horvath admitted that there is no formal, comprehensive study in Slovakia, with most evidence being anecdotal or based on discussions with businesses. Nevertheless, he pointed to the elimination of currency risk, which has facilitated investment in the country. Firms operating in Slovakia, particularly in manufacturing, benefit from not having to consider exchange rate volatility in their dealings with European clients and suppliers. The automotive sector illustrates this impact: historically strong in Slovakia, it has developed into a full ecosystem of suppliers, aided by the predictability provided by the euro. Horvath noted that the euro has likely enhanced Slovakia’s openness and strengthened its global market positioning, though he acknowledged that the underlying business model predates euro adoption.
Regarding interest rates, Horvath explained that Slovakia’s key rates have tracked eurozone trends, with fluctuations in government bond yields reflecting fiscal conditions, market perceptions, and credit ratings. Inflation in Slovakia has broadly mirrored that of the euro area, including periods of low inflation following the financial crisis. He stressed that recent inflationary spikes in 2012-2013 were driven by external factors beyond the control of monetary policy, and that the euro framework has generally suited the Slovak economy.
Horvath also addressed Slovakia’s influence within the European Central Bank’s decision-making. He affirmed that the country’s voice is heard, but warned that for eurozone monetary policy to align effectively with national needs, domestic economic structures must be prepared. Prior to joining the eurozone, Slovakia feared that general interest rates would be too low for a fast-growing economy. Today, the concern has shifted from currency issues to broader structural challenges, including stagnation in economic convergence with Western European living standards – an outcome attributed not to the euro, but to prolonged underinvestment in modernization and reform.
Source: BNR interview