Download - Katowice 2 June 2010
Euro in Slovakia 1st Year With the Common Currency And Its First Effects
Igor Barát Member of the Board, Poštová banka, Bratislava
Plenipotentiary of the Slovak Governement for the Introduction of the Euro (2007-2009)
Katowice 2 June 2010
2
January 2009: Slovaks with the new currency
General atmosphere calm and positive High level of public awareness Enough cash ATMs, POS operational No technical or organisational limits Mandatory double pricing Dual circulation till 16 January Extended hours in banks for cash exchange
•Technically: •Macro impact:
Price increase by • 0,12 – 0,19 % (NBS) • 0,24% (MoF)
Less than Malta, Cyprus, Slovenia (0,3 %)
Unjustified jumps in prices not registered
Some insignificant cases found in restaurants, hotels, cafés, services
3
External Factors Dominated in Early 2009
Gas Crises in January – (dramatic drop in RU gas supply)
-80% of industry stopped or significantly limited production-Most of the economy in crises and emergency regime
Outburst of the global financial and economic crises
-Drop in foreign demand-Depreciation of CZK, PLN, HUF up to 30% to the Euro-„Shopping tourism“ of Slovaks -Decrease in passive tourism
Difficult to abstract the immediate impact of the euro from other factors
GDP -4,7%
4
Maastricht Criteria
Criterion
March 2008 ref. value2008 (now)
April 2010
inflation (average HICP, %) 2,2 3,2 (0,9) 0,3
interest rates (%) 4,5 6,5 (6,2) 4,5
public debt (% GDP) 29,4 60,0 35,7
public deficit (% GDP) 2,2 3,0 6,8
Exchange Rate Stability ERM II since Nov. 05
Source: Eurostat, European Commission, MF SR, NBS
5
Inflation remains among the lowests
6
-6-5-4-3-2-10123456789
101112
2005 2006 2007 2008 2009
Slovakia
Germany
Czech Republic
EU 27
GDP Growth
7
Benefits of the Euro Adoption
Direct (immediate) benefits
•Exchange rate stability/elimination of exchange rate risk•lower costs of capital•elimination of some transaction costs•higher price transparency•Higher comfort for people abroad•Psychological aspects
Indirect (long-term) benefits
•trade growth•increase of FDI•faster growth/increase of living standards/progress in real convergence
8
The introduction of the euro is/was...
10% 8% 7% 10% 10% 15%20% 24%
31%
39%35% 36%
39% 38%
43%
51%50%
47%
32%38%
27%
34%30%
25%
19% 16%15%11% 14%
15%
11%14%
10%3% 5% 4%8% 5%
15%6% 8% 7% 7% 5% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
4/2007 11/2007 2/2008 5/2008 7/2008 11/2008 1/2009 3/2009 X.09
NK/NA
Definitely baddecision
Rather baddecision
Rather gooddecision
Definitely gooddecision
Focus Agency, SK
9
Slovakia Has The Best Rating In The Region
Standard & Poor’s
Moody’s Fitch Rating JCR R&I
Slovakia
A+stabilný výhľad
A1stabilný výhľad
A+stabilný výhľad
A+stabilný výhľad
Astabilný výhľad
Czech Republic
Astabilný výhľad
A1stabilný výhľad
A+stabilný výhľad
Astabilný výhľad
Astabilný výhľad
Poland
A-stabilný výhľad
A2stabilný výhľad
A-stabilný výhľad
A-stabilný výhľad
A-stabilný výhľad
Hungary
BBB-negatívny výhľad
Baa1negatívny výhľad
BBBnegatívny výhľad
BBB+stabilný výhľad
BBBstabilný výhľad
10
Medium-Term Outlook for Slovakia is more optimistic
Source: Consensus Economics.
11
Thanks for Your Kind Attention
Igor Barát
Member of the Board of DirectorsPoštová banka, a.s. [email protected]
12
long-run GDP increase by 7-20 %
0 0,1 0,2 0,3 0,4
costs
benefits
(% HDP)
financialtransaction costs
asministrativetransaction costs
exchange rate risks
currencyconversion costs*
loss of independentmonetary policy
Benefits vs. Costs
13
Fiscal Deficit
14
Fiscal Deficit
15
ERM II Exchange Rate Development
Nov 2005 ERM II entry 38,4550 SKK/EUR
Mar 2007 1. revaluation 35,4424 -7,83%
May 2008 2. revaluation 30,1260 -21,66%
July 2008 conv. rate 30,1260
16
Euro Cash Frontloading
Banknotes188 million ( 7 b. €) obtained thru ESCB/OeNB Vienna51 million (950 mil €) subfrontloaded to banks
Coins499 million (150 mil. €)Minted in Kremnica Mint, Slovakia283 million (98 mil €) subfrontloaded to banks
Starter Kits for households and SMEsSet 45 coins worth 16,60 € (500 SKK)1,32 mil produced and sold
17
Information campaign
In cooperation with professional agency: Creo/Young & Rubicam
Information campaign for general public started in January 2008
Lasted till end February 2009
Partners: EC, ECB, OeNB, domestic institutions
NBSGovernmentEuropean Commission
Domestic sources 6,2 m EUREuropean Commission 1,8 m EUR Total costs 7,9 m EUR
47%
31%22%
18
Euro myths and fears
„Euro = „teuro“ = price jumps“
„Euro helps businesses, not ordinary people“
„We´ll face psycho shock“
„We´ll need pouches“ (europurses)
„Seniors will face serious problems“
„We´ll become poorest euro nation“
„Neighbours are smarter – they wait“
19
Published
•Daily newspapers (paid)•Leaflets•NBS website•Partner websites•Media support
Voting options
•Phone call (paid)•SMS (paid)•Internet (free)
RESULT:Over 140.000 votes
20
90899188908787868679
70
39
3337
35
9107119111212
1220
28
5451
42
45
01020
3040506070
8090
100
enough not enough
Do you have enough information about the euro changeover (Slovak Stat´s)?
Saturation with information
21
2730 29 31 28
37 3538
43 41 40
29
45 42
5154
3331
27 26 28 26
0
10
20
30
40
50
60
X.200
4
V.200
6
XI.200
6
V.200
7
V.200
8
20.6
.200
8
21.7
.200
8
22.8
.200
8
24.9
.200
8
21.1
0.20
08
14.1
1.20
08
benefit disadvantage
What will euro mean for you, personally? (Slovak Stat´s)
Public opinion on the euro
22
Hurdles and troubles
Everybody needs more money, staff...Public procurement process Short time for minting, sub/frontloadingSlow legislation – amendments, modifications, exceptionsPublic sector is always slower Public myths to be fighted („teuro“, coins....)Always possible to find arguments against
Good Reasons