ANDRES LIPSTOK: the euro would increase stability and certainty

Postitatud:

18.02.2009

Today, 18 February, Governor of Eesti Pank ANDRES LIPSTOK spoke at the Cities and Rural Municipalities Day organised in the Sokos Viru conference centre by the Association of Estonian Cities and the Association of Municipalities of Estonia. He said the current monetary system supports both coping with the changing economic environment and the adoption of the euro.

"The most topical economic issue is how to manage with the changed world, although nobody can exactly say what the new world is like. One thing is sure - the flexibility of economies, enterprises, people and governments in adjusting to the constantly changing situation will be put to the test," Lipstok said when speaking about the global economic situation.

"Although global economic growth outlooks have markedly deteriorated and the fate of our trading partners affects also Estonia's economic growth, I am still pleased to say the prospects of changing over to the euro have improved. The euro would provide our economy and people with additional feeling of security and increase Estonia's credibility in the eyes of investors whose opinions also impact Estonia's economic situation," said Lipstok, adding that inflation, which has been problematic up to now, has declined and prices will continue to decrease. "According to current estimates, it is possible to adopt the euro in 2010. However, one of the key issues will be the budget deficit criterion. The consolidated state budget deficit will definitely have to be below 3% of GDP in both 2009 and 2010," Governor of the central bank said.

Lipstok added that Estonia has no problems with meeting the other Maastricht criteria – our general government debt is among the smallest in the European Union, the exchange rate has been stable for nearly 17 years, Estonia's national provisions comply with euro-area legislation, and there is no basis to assume the long-term interest rate criterion would receive a negative assessment. "In addition, we have no problems with central bank independence and Eesti Pank is technically prepared for the adoption of the single currency," said Andres Lipstok.

In addition, the latest Report on the Adoption of the Euro, which Eesti Pank publishes biannually, is available at
the website of Eesti Pank.