Euro introduction prompts look to future

RIGA - The introduction of the euro caused few waves in the Baltic states, but did raise questions about the countries' future entry to the European Union.

With Latvia, Lithuania and Estonia all hoping to join the EU by 2004 - just in time for the 2005 parliamentary elections - all three are facing their own euro introduction in 2006 at the earliest.

All 10 candidate countries are getting a preview of how replacing their own currencies might work, while the EU is solidifying its stance on requiring all new entrants to accept the euro as their national tender.

The new coins and bills - the first tangible forms of the Pan-EU currency launched in 1999 - are quickly replacing local currencies in all EU countries except for the United Kingdom, Sweden and Denmark, which decided to hang on to their pounds and crowns.

The new cash currency, along with the few countries that declined to accept it, has also prompted European Commissioner for Enlargement Guenter Verheugen to say all candidate countries should be expected to adopt the euro.

"We are negotiation in such a way that no future member reserves the right to remain outside euroland," he said. "We do not want to have, in the future, the kind of problems we currently have with some members."

Both the Latvian Foreign Affairs Ministry and the central bank don't foresee any reason their country, or other Baltic nations, should want to shut out the euro.

"In its position paper for the accession negotiations, Latvia recognizes the economic and monetary policy of the European Community and is able to meet the required criteria, thus becoming a member of the Economic and Monetary Union in the future," said Vilmars Henins, press secretary for the Foreign Affairs Ministry.

And the Baltics shouldn't see the same cash hoarding as in some EU countries during a changeover.

Because cash euros will slowly worm their way in to local economies through deposits from travelers, investments, lending and borrowing, any changeover from lats to euros should go smoothly, said Helmut Ancans, head of the monetary policy department at the Bank of Latvia.

"After joining the EU, we will repeg the currency to the euro for a minimum of two years. If Latvia meets other economic criteria then the euro will be accepted as the official currency," Ancans said.

For now, action on the euro at banks around the Baltics remains light.

In Latvia, Parex Bank spokesman Levs Fainveics said people inquired about the new currency but very little activity was seen at currency exchanges.

Aleksandras Federas, spokesman for Vilniaus Bankas in Lithuania, said people were buying euro notes, but currency turnover was low.

Meanwhile Eesti Uhispank, Estonia's second largest bank, reported people mainly asking where an how the new euro notes and coins could be used.