IMF urges fast adoption of euro for CEE 's FT

  • 2009-04-06
  • TBT Staff

The report said that CEE countries should be able to adopt use the euro without full eurozone membership

The IMF has urged the European Union to allow CEE countriesto quickly adopt the euro without enjoying full membership in the eurozone, theFinancial Times found on April 6.

The Financial Times cited a confidential report from theInternational Monetary fund that argued CEE countries should be given a kind ofquasi-membership by being allowed to use the euro without meeting theMaastricht criteria but being unable to hold a seat in the European CentralBank.

The currencies of the three Baltic states, along with thatof Bulgaria, are pegged to the euro. There has recently been widespread speculationabout the ability of the countries to maintain the peg as the economicsituation worsens. The countries have all insisted that they will be able tomaintain the pegs.

"For countries in the EU, 'euroisation' offers the largest benefitsin terms of resolving the foreign currency debt overhang (accumulation), removing uncertainty and restoring confidence," the IMF reportedly said.

The report cited by the Financial Times, however, is a monthold and has been ill-received by authorities in the European Union.

Furthermore, many analysts say that the recommendation isnot realistic and that it has likely been trumped by decisions made to supportthe countries at the recent G20 meeting.

"If it does exist, this could be a document that was used toprovide an incentive to EU leaders to push them and help them realise howserious the situation is in central and Eastern Europe," Simon Quijano-Evans,CEE Economist at Cheuvreux, was reported as saying by Reuters news agency.