Slovakia asks ECB to check its euro credentials

Slovakia has moved closer to joining the European common currency, the euro. Bratislava has officially asked the European Central Bank and European Commission to assess whether it is ready to adopt the new currency in January of next year.

Photo: European Commission

The final stance of the European Union on the adoption of the euro in Slovakia will be known on the seventh of May. The European Parliament and EU members should confirm it shortly after that. Last week, the European Parliament sent its delegation, lead by the chairwoman of the committee for Economic and Monetary affairs, Pervenche Beres. She explained why the European Parliament sent its representatives prior to the final decision of the EU commission.

“For us this is the first experience that we are carrying as such. This means to come and visit the country before the commission comes out with the convergence report. Why did we decide to do this? We thought it will be much more valuable to be here in advance, in capacity to find out what the different stake holders have to say vis-á-vis the engagement to join the euro.”

Pervenche Beres also referred to the role of the media in the euro information campaign.

“This is the task where you journalists will have to engage also hand in hand with the national authorities. Not just to forward the propaganda by the government, but to make sure people understand what this is all about. For fragile population, this is a challenge. Because the way you count, and the currency, the money you use on the day to day basis, this is for market economy the basis of confidence.”

Despite the fact that Slovakia currently meets the Maastricht criteria, the EU has repeatedly expressed concerns over the sustainability of this state. According to Pervenche Beres, the discussion has thus moved from the nominal meeting of the Maastricht criteria to their sustainability.

“Of course, there has been a question mark raised vis-á-vis the sustainability of the inflation criteria. Nowadays, I can see that this argument about sustainability is a tricky one, because it’s something that is not clearly defined. But I would say that this criteria has always existed. In the beginning, when Italy and Belgium were admitted as first members of the euro zone, they didn’t meet the one of the criteria, which was the debt criteria. But they were admitted, because there was an evaluation made, that it would be sustainable.”

Concerns over the sustainability do have a source in the example of Slovenia. It met the criteria without any major problems, however now it faces high inflation. That’s why the EU is investigating whether the same situation can also emerge in Slovakia. If the experts from the ECB and EU commission came to a conclusion that this can also be the case of Slovakia, the country would most likely not get the invitation to join the euro zone. According to Slovak economists however, this should not happen for two main reasons. The first one is that there is much stronger competition on the food market as well as on the consumer goods market. The second one is that Slovakia hasn’t artificially frozen the price of energy prior the adoption of the euro. Pervenche Beres concluded her speech with this statement.

“Once more I think your country is really engaged in this process, I have no doubt on this point. And the second point is that if the decision is yes, you will have a challenging job to make sure people really understand what all this history is about and to make sure that they can be proud to join the euro zone and proud to have euro currency in their pockets.”