Czech PM Says Euro Adoption Possible as Early as 2020

WSJ: Outgoing Caretaker Premier Is Tipped to Head Central Bank.

PRAGUE—Czech Prime Minister Jiri Rusnok said his country should revive its stalled bid to adopt the euro, saying the common currency could be introduced as early as 2020, and praised the central bank's recent currency intervention as a possible early step toward joining the euro zone.

In an interview with The Wall Street Journal this week, the outgoing caretaker premier, who is tipped to lead the central bank when the current governor's term expires in 2016, said it was time to reopen debate on the euro.

Recent opinion polls show the public is against dropping the koruna.

"From the perspective of support among the European political and business establishment, the euro-zone project is still very strong," he said.

"I see it as important that the country's political representation begins to discuss this again. It is crucial to start changing the overall public's view that this path could in any way damage us or jeopardize our country's sovereignty," he added.

The country's president, Milos Zeman, has said he intends to nominate Mr. Rusnok, an economist, to the central bank's board as of March after his seven-month stint as caretaker premier ends late January.

Czech politicians favoring euro adoption should make it one of key themes of the next parliamentary election, expected in 2017, and win voters' support for making the country a euro-zone member "in six to seven years from now," said Mr. Rusnok. The country's export-focused economy would benefit from sharing the euro, he added.

"We need to be close to our key trading partners who either already are in the euro zone or are headed there, and I don't see any signs that these countries think that the euro zone would cease to exist," Mr. Rusnok said, alluding to fears of a possible unraveling of the currency area during Greece's debt crisis at the start of the decade.

Mr. Rusnok's cabinet has run the country since last summer. The previous conservative cabinet collapsed in June in the wake of a power-abuse and corruption scandal.

The collapsed government was lukewarm about the Czech Republic's eventual euro-zone membership, reflecting similar views of current policy makers at the Czech National Bank, appointed by the former Czech president and outspoken euroskeptic, Vaclav Klaus. Mr. Rusnok is expected to succeed Eva Zamrazilova, a self-professed hawk and euro-skeptic on the board.

The outgoing premier praised the central bank for its efforts to kick-start a recovery through currency intervention.

"For about five years, the economy has practically contracted or stagnated with the past year's gross domestic product [in absolute terms] being somewhere at its 2008 levels or below," he said, adding that he has pushed for higher government spending, drafting "a slightly expansionary" budget for 2014 in comparison with last year.

When launching its €7.4 billion ($10.12 billion) currency intervention in November, the central bank pledged to keep the koruna exchange rate near 27 to the euro, effectively setting a desired target for the two currencies.

"This intervention in fact doesn't go against a general strategic thinking to get closer toward the euro zone," Mr. Rusnok said, adding that by weakening the koruna the bank toppled "the myth of the untouchable, always firm and preferably strengthening Czech koruna."

Write to Leos Rousek

Corrections & Amplifications 
The central bank launched a €7.4 billion ($10.12 billion) currency intervention in November. An earlier version of this article incorrectly said the currency intervention was €4 billion.