Hansson: Latvia and its reforms offer a positive example for the countries of the euro area
At a conference today in Riga on the adoption of the euro and the preparations for it, Governor of Eesti Pank Ardo Hansson spoke about Estonia's positive experience of changing over to the euro and expressed support for Latvia's euro aspirations.
"For Estonia, joining the euro area meant many years of ceaseless effort to put economic policy on a strong base by carrying out the necessary reforms and setting clear goals for the economy. But the need to follow a reliable and sustainable economic and fiscal policy does not disappear with the adoption of the single currency, but rather the opposite, and this is one of the key issues in an economic and monetary union. The difficulties of recent years in the euro area are proof of this", he said.
Hansson pointed out that is hard to calculate the economic impact of the transition to the euro, as this will only become clear after a long time, and anyway there are many other factors that can affect an economy. "There have been significant positive events, and these are mainly related to various economic policy reforms, including the adoption of the euro", he explained.
He agreed that joining the euro area had had an effect on Estonian inflation, but added that assessments by both Eurostat and the central bank show that price rises were one-off events and only small. "Core inflation and inflation expectations in Estonia did not change", he noted.
"Latvia's efforts to bring the budget into balance and to strengthen that balance, and the way the country coped with the crisis deserve great praise from the countries of the euro area. Latvia's experience offers clear proof of how efforts in the short-term to balance the budget and to carry out structural reform pay off in the long run with the benefits they bring. If Latvia can meet all the criteria, it could be the next country to join the euro area" he concluded.
Ardo Hansson's speech will be published in Estonian on the Eesti Pank website during the day.
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