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Latvia becomes country #18 using Euros

  • January 2nd, 2014
  • Posted by EU Australia

EU Money - ecLatvia began the New Year by becoming the 18th country to adopt the Euro currency, out of the 28 members of the European Union.

EFFORTS TO GET IN

Latvia FlagSeveral member governments have been lining up to get into the Eurozone since the currency was inaugurated in 1999.

While all members are bound by treaty to join the Euro, with some wanting to postpone it forever, those in favour have to meet budgetary requirements, putting parameters on their state deficits and interest rates.

BRUSSELS PLEASED

Latvia’s success in stepping up into the Euro was welcomed in Brussels as a sign of its vitality, as the second world exchange currency.

“This is a major event, not only for Latvia, but for the Euro area itself, which remains stable, attractive and open to new members”, said Jose Manuel Barroso, President of the European Commission.

“For Latvia, it is the result of impressive efforts and the unwavering determination of the authorities and the Latvian people. Thanks to these efforts, undertaken in the aftermath of a deep economic crisis, Latvia will enter the Euro area stronger than ever, sending an encouraging message to other countries undergoing a difficult economic adjustment.”

Olli Rehn, Vice-President of the European Commission responsible for Economic and Monetary Affairs and the Euro, said: ” Joining the Euro marks the completion of Latvia’s journey back to the political and economic heart of our continent, and that is something for all of us to celebrate.”

GOODBYE TO ‘BRASS RAZOOS’

latsThe former currency, the Lats, had been in use in its old form, up to Soviet occupation of the country in 1940; it then used “joke money” Russian Roubles up to the collapse of the Soviet Union , independence, and the country’s entry in to the EU — new Lats coming into use in 1992.

On the eve of its adoption the Euro was getting 53% public support in EU polling within Latvia; seen as a stabilising link to the overall EU economy, a source of huge savings on exchange rate transfers, and a protection against adverse impacts of currency devaluation.

ENGLISH OBJECTIONS AGAIN – “SEEN BY MANY”

It had been argued over, critics pointing to the European financial crisis after 2008, as a sign of gross weakness; and to heavy demands on smaller economies to keep up with the budget standards, e.g. where defined by their per capita GDP.

Outside the country itself, as on previous such occasions, opposition was mostly in the form of whining and grumbling in the finance industry and news media in England:  “Single currency union marks 15th anniversary by expanding – 18 months after crisis in Greece threatened breakup”, lead-off the Guardian, invoking a much-contested notion; “Little public enthusiasm”, it headlined; “ … but why join a currency seen by many as in crisis?”, the BBC felt impelled to ask.

EUROPEAN SUMMIT

council-buildingHeads of government at the pre-Christmas European summit, 19-20.12.13, had declared themselves satisfied with the progress of key financial and monetary changes, working towards banking union through the European Central Bank.

Said a communiqué:

eu-money-symbol-coins“The European Council welcomes the final agreement reached by the legislators on the Deposit Guarantee Scheme directive and the Bank Recovery and Resolution Directive. It also welcomes the general approach and the specific conclusions reached by the Council on the Single Resolution Mechanism (SRM). Alongside the already adopted Single Supervisory Mechanism, the SRM will represent a crucial step towards the completion of the Banking Union…”

The government leaders had an extensive discussion on the Common Security and Defence Policy of the European Union, bringing in  the Secretary General of the NATO alliance, Anders Fogh Rasmussen, for consultations.

Reference

European Council, Brussels, European Council 19-20.12.13- Conclusions, E Council BCL 20/12, EUCO217/13. http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/140245.pdf, (2.1.14).

Damien McGuinness, Latvia hopes euro will bring stability, BBC, London, 30.12.13. http://www.bbc.co.uk/news/business-25332243, (2.1.14).

Graeme Wearden, Latvia joins eurozone at midnight despite little public enthusiasm, The Guardian, Manchester, 1.1.14. http://www.theguardian.com/business/2013/dec/31/latvia-joins-euro-single-currency, (2.1.14).

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