TALLINN - Vahur Kraft, former governor of the Bank of Estonia, said Estonia could adopt the euro in transactions from the start of 2007 even if it is unable to meet the Maastricht inflation criterion.
Kraft, who now heads the Estonian branch of Nordea Bank, wrote in an article published in Eesti Paevaleht that if Estonia fails 's either because of its own poor performance or due to internal or external political factors 's to qualify for adoption of the common currency as of Jan. 1, 2007, a proposal could be made that the country introduce euro voluntarily in day-to-day transactions.
"This can be done by keeping deposits in euros, using euro as the currency in transactions and showing the prices of goods and services in euros," he said.
Voluntary introduction of the euro in transactions would certainly increase the efficiency of certain branches of the economy, he said.
"So it could be the state's goal to create conditions whereby companies and individuals could freely choose the currency they use in mutual transactions. It is important to emphasize that this must happen as a result of a voluntary accord between parties," Kraft said.
Theoretically, the government could go even further and allow taxes to be paid in euros, he added.
Estonia could also use the experience of countries that joined the euro in the first round and introduce the common currency in two stages. Kraft suggested that euro would be introduced as account money from Jan. 1, 2007, just like it was done by 11 countries in 1999. Later on, as the possibilities and political circumstances become clearer, euro cash could be introduced.