Re: Of relevance to the Baltics...
- From: holman@xxxxxxxxxxxxxxxxx (Eugene Holman)
- Date: Thu, 08 Jun 2006 16:34:17 +0300
In article <1149768907.887761.59360@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
Uno Qualunque wrote:
Eugene Holman wrote:
Lithuania and the two other Baltic countries should consider this option.
it's the EU core nations that should consider this option, and maybe they
but besides that, it is frankly unbelievable how can they decide to keep
Estonia and Lithuania out of the Euro: their public finances state and
their economic growth are among the best in the EU.
the reasons to keep them out are bizarre: in the case of Lithuania because
the inflation is 0.1% more than what allowed in the Maastricht treaty,
which is such a small percentage that could be a statistical error.
moreover, that percentage is calculated against, not the euro zone states,
but against Finland plus Sweden and Poland, two states out of the euro.
when the Maastricht treaty was drafted, of course all states were outside
the euro, but now those provisions should be reinterpretated, so that they
in my opinion the lithuanian government should raise the issue at the next
euro summit, and strongly demand the admission: I'd be rather curious to
know how the italian, french, german and all the other governments who have
been strongly violating the criteria could say no.
in ten years time the euro could collapse, if it will be perceived as the
cause of the current bad economic performance, therefore it would be in the
euro enthusiasts to admit as more countries as possible in the monetary
What Eugene seems to be suggesting is unilaterally switching to the
euro; it wouldn't mean becoming part of the eurozone. It can be done,
though -- Montenegro, for instance, uses the euro.
So does Kosovo, where the euro and the Yugoslav dinar are both legal
tender. In northern Sweden in the areas bordering on Finland the euro and
the Swedish krona are both legal tender, with the euro being accepted at a
favorable ¤1 = SEK 10 rate, rather than exchanged at the official ¤1 = SEK
A few countries the
US dollar of their own accord.
I'm suggesting that the three Baltic countries, whose total population
(7.2 million) is considerably smaller than that of the largest Euro-using
conurbation, Greater Paris (11.4 million), should make a case that nothing
can prevent them from switching unilaterally to the euro if they want to.
Of course, they are so well behaved and law-abiding that they would never
even *think* of doing such a thing, even if some euro countries, such as
France, Germany, Italy, and Greece, have violated the euro criteria.
Not being an economist, I only see this in terms of convenience. The three
Baltic currencies succeeded in doing what was expected of them during the
transition from command to market economies. In today's world they are
increasingly expensive to maintain. Baltic businesses and tourists pay a
currency transfer tax that we in the eurozone do not have to pay when
dealing with most other EU countries, and Baltic interest rates have to be
higher than euro interest rates because, the proven stability of Baltic
currencies not withstanding, the possibility of using draconian financial
tools such as devaluation to deal with inflation still remains.
I still think that the possibility exists of the three Baltic countries
going over to the euro some time in 2007.
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