Latvia plans to be ready to introduce the European common
currency, the euro, in 2014. Should it really be done? The turbulence in the
euro area caused by the debt crisis has given rise to a number of questions and
doubt. Overall, the euro area is healthy, yet it reflects the developments in
the debt crisis of several its member states which Latvia should carefully
follow thinking about the planned euro changeover. The euro area still has more
pluses. Why? Because it will continue to mean greater security, confidence and
financial advantages: it will provide good preconditions for growth. The small
EU member states that already use the euro – Slovenia, Slovakia, Cyprus, Malta,
and Estonia have successfully used the euro shield in the global crisis: the
drop in their economies has been smaller.
A wider discussion on the opportunities provided by the euro no
doubt needed in Latvia and, as far as we know, the Government is planning to
hold such a discussion (the Euro Changeover Steering Committee is planning
several conferences) and it is also on the agenda of the Bank of Latvia and IMF
Conference at the beginning of the summer.
What is lacking in the public discussion on the euro is awareness of the real
possibilities offered by the common currency: that with euro Latvia will repay
its debt cheaper, saving huge sums on the interest difference; that we will not
have to pay to convert currencies; that for responsible small countries the euro
has provided protection both in terms on interest rates and ECB loan facility
and finally that we are an EU country for whom the euro is one of the
cornerstones in capital movement, common trade and functioning of the financial
system.Currently it is the scepticism regarding the health of the euro area and worries that dominate the euro discussion because of the news about the euro area debt crisis and Greek mistakes. People feel disappointed when they learn that the euro does not solve all economic problems and does not make anyone wealthy overnight, that it requires a reasonable budget, maintaining an efficient economic structure and developing protective mechanisms, i.e. investing in the stability fund that acts to boost confidence that the debt crisis problems that still have to be resolved in particular countries, the euro will not go anywhere. All these basic matters should be explained in the discussion so that people would be able to have an informed opinion regarding the Government's strategy to introduce the euro in 2014.
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