Euro fast track interests PM

  • 2009-04-08
  • By Adam Mullett
VILNIUS - The prime minister said he welcomed the idea of fast-track euro adoption, after The Financial Times brought a report to light in which the International Monetary Fund urged the EU to allow CEE countries to adopt the euro without the benefits of full membership in the eurozone.

Latvia was against the idea saying that it was aiming for full membership.
The Financial Times quoted on April 6 a leaked confidential IMF report as saying the eurozone could relax entry rules so that struggling eastern EU countries could join as quasi-members by taking on the currency without getting a seat on the European Central Bank's (ECB) Governing Council.

The ECB and European Commission have rejected the options out of hand, but Lithuanian Prime Minister Andrius Kubilius said he expects more talks on the issue.
"The discussion about ... the partial [euro] adoption, as advocated by the IMF, continues and we expect to arrive at rational and effective solutions," Kubilius said on public radio.
"Lithuania would benefit from faster euro adoption, because it would help to solve many problems caused by the financial crisis," he added.

ECB member Ewald Nowotny, however, said unilateral adoption was legally impossible and would hurt the eurozone.

"This is not realistic. The membership for the European monetary union has very clear rules and these rules have to be followed," Nowotny told Reuters in an interview.
"From an economic point of view, it would not be a good signal [for] the confidence ... towards the euro."
Kubilius' advisor on economic issues, Mykolas Majauskas, earlier said at a conference that the government is against shortcuts to euro adoption (see story Page 12).

Majauskas sought to clarify the prime minister's comments saying that the country won't break any rules.
"I think there has been a misinterpretation 's we aren't looking to break any rules 's unilateral adoption would break the rules. Countries talk about the strategic importance of this and that is what Kubilius is talking about," he told TBT on April 7. He said that Lithuania had proven that it had strong fiscal policies and responsible leadership and that it had earned the right for the euro. He added that the euro would have a stabilizing effect on the country.

Lithuania, and fellow Baltic states Latvia and Estonia, have their currencies pegged to the euro and have pledged to keep them that way, despite frequent rumors of devaluations.
Eurozone entry could remove the currency worries of the three countries.

Latvian Finance Minister Einars Repse told newspaper Dienas bizness that he was against the idea as it would mean his country would not be a full-fledged euro zone member, but a "satellite country."
Kubilius' spokesman Ridas Jasiulionis told TBT that the PM is not against the idea of not holding a seat on the ECB board if it is just for a short period.

Slovakia was the last country to join the eurozone on Jan. 1, 2009.