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Národná banka Slovenska
Communication Section
CLOSING REMARKS
Ľudovít Governor of Národná banka Slovenska
by Mr Ódor, Deputy
at the conference
10 YEARS OF THE €URO IN SLOVAKIA
International Conference to Mark the 10th Anniversary
of the Introduction of the Euro in Slovakia
Bratislava, 11 January 2019
Ladies and gentlemen,
Let me begin by thanking all the conference speakers and participants for frank and lively
discussions. Usually at such anniversaries everybody says everything is fine and the future is
bright, but these discussions were really balanced, and I liked that. We talked about
opportunities, but also about some possible problems in the future. I will try to summarise the
main messages from my point of view.
The first issue is the euro itself. When talking about the euro, we heard that it's not just an
economic concept, but also a political project. Some called themselves proud members of the
euro area. So, it's
not just about economic numbers. If we look back at the things said before
the creation of the euro, they included some very pessimistic projections. For example, Milton
Friedman gave it ten years at the most. Other voices, however, were very optimistic about the
common currency. They expected a huge increase in trade and an endogenous convergence
effect. They said that while the euro area may not be the best or an optimal currency union,
once countries joined it, they would endogenously converge towards each other. Today, after
twenty years, we see something in between these opposite views.
Turning to the euro adoption strategy, it was made clear in the presentations that the strategy in
Slovakia was very ambitious. When the central bank and Finance Ministry began talks on this
issue in 2003, we were light years away from fulfilling all the Maastricht criteria. In the end,
the decision to seek euro adoption was a good one and the timing of the adoption was also
but that's part of life. As regards the
excellent. Of course, we were lucky to some extent,
strategy, it was noted today how Slovakia benefited from the euro even before adopting it. Euro
preparations acted as a catalyst for structural reforms and public finance consolidation
strategies, and they also changed how Slovakia was perceived within the European Union. As
was noted today, the road to fulfilling the criteria was a little bit bumpy. Slovakia had previously
been on a floating exchange rate, so the major issues included the sustainability of the inflation
criterion and the exchange rate pass-through to prices. But the discussions were frank and
turned out successful.
In terms of the technical issues and the technical changeover, the euro adoption was much less
bumpy.
I'm glad that although we took some its profits, the banking industry is very happy with the
euro adoption. The same goes for the citizens and firms, and no major political party is explicitly
against it, either. The euro adoption in Slovakia is praised mainly for supporting exchange rate
stability, ease of travel, and business. That is pleasing, because it has not been the case in each
country that adopted the euro. Several participants stressed that Slovakia could be a role model
for countries joining the euro in the future. It was good to hear this from distinguished
international economists, and even better to hear it from a Czech economist.
Now the question is how we should look at the euro per se. The euro is not a guarantee of
prosperity, not something that automatically makes you richer once you adopt it. The common
currency is not a blank cheque. It's very important to bear in mind that there are good examples
and bad examples. It is not set in stone whether you will prosper or struggle after entering the
euro area. Other policies are extremely important. When a country joins the euro area, it gives
up the exchange rate as a demand stabilisation tool, so it should prepare other policies to fight
against asymmetric shocks, including macroprudential, fiscal, labour market and other
structural policies.
Today we saw a very lively discussion about the future of the common currency. I really liked
the point that we should not see the euro as a blame game between European institutions and
Member States. Everybody should understand that it's kind a of a shared responsibility. We
should try hard to figure out how to reform our governance framework in order to incentivise
European institutions, as well as the Member States themselves, to see the euro as a common
concern.
We talked a little bit about the potential next recession and crisis. We heard how the policy
space is more limited now than before the previous crisis. On the other hand, some more
optimistic points were made: for example, the banking sector is in much better shape now than
before the last recession.
What we didn't discuss, but in my view is crucial to the euro area's
shock-absorbing capacity,
are private risk-sharing channels. Here the discussion about the capital markets union is very
important.
Towards the end, some speakers stressed that when we have problems, we sometimes discuss
and see things from a limited perspective, and that it is very important not to lose sight of the
broader picture. The euro area is not just a collection of member states, but a big economic
player in the world. We should therefore also try to respond to the shocks coming from global
issues, such as trade wars or major productivity trends.
Today we heard a lot of interesting ideas in many areas. I opened my presentation earlier today
by mentioning my son who is now ten years old. But I also have an older daughter, and I know
that the next ten years are usually much more difficult than the first ten. When I look at the
history of the euro, the same also applies; nevertheless, I don't think the trend is
twenty-year
uniform, so I hope that Slovakia will continue being a successful euro area member over the
next ten years. Thank you for your attention and your contributions.