20 Euro – Slovakia

In 2022, Slovakia's currency situation was defined by its continued membership in the Eurozone, having adopted the euro in 2009. As such, the country did not have an independent monetary policy; its interest rates and broader monetary stance were set by the European Central Bank (ECB) in response to Eurozone-wide inflation. This year was particularly significant as the ECB began a historic cycle of interest rate hikes in July to combat soaring inflation, which directly impacted the cost of credit and economic conditions in Slovakia. The Slovak koruna was no longer in circulation, eliminating direct exchange rate risk with the euro but also removing a potential national tool for economic adjustment.

The primary domestic economic pressure was exceptionally high inflation, which peaked at over 15% by the end of 2022, significantly above the Eurozone average. This was driven by the same global shocks affecting all of Europe: soaring energy prices exacerbated by the war in Ukraine and persistent post-pandemic supply chain issues. However, Slovakia's inflation was amplified by specific national factors, including a heavy reliance on energy-intensive industry and government fiscal measures, such as pandemic-related stimulus, which boosted domestic demand. The lack of a national currency meant Slovakia could not devalue to gain trade competitiveness or set interest rates specifically for its own economic cycle.

Consequently, the key debates within Slovakia focused on fiscal policy and energy security as the main tools to address the cost-of-living crisis. The government implemented several costly packages of subsidies and price caps on energy and basic food items to shield households and businesses, leading to a substantial widening of the budget deficit. The currency situation, therefore, framed Slovakia's economic challenges in 2022 as one of navigating Eurozone monetary tightening while using national fiscal measures to mitigate the social impact, all within the constraints of a shared currency.