Candidates ask for changes to euro adoption procedure
Many of Maltas countries have been highly critical
of the system for euro adoption and have argued persistently for changes,
won no support Monday from the European Central Bank for their pleas
that EU policymakers reconsider the rules for adopting the euro currency.
European Central Bank Executive Board Member Gertrude Tumpel-Gugerell
said there will be no change to euro entry criteria, despite criticism
from many of the 10 countries at a conference here that the rules will
create uncertainty and harm their economies.
Tumpel-Gugerell told central bankers from the 10 new EU applicants will
be judged by the same standards that existing euro zone members have
"The equal treatment criteria will continue to govern the application
of the convergence criteria. There will be no additional criteria, nor
will there be relaxation of the existing criteria," she said.
Asked for his reaction, Central Bank of Malta Governor Michael Bonello
told the international press, "The flaming hoops are there and
we will jump through them. We have no option really." Mr Bonello
was unavailable for comment yesterday.
Tumpel-Gugerells stance is in line with ECB and EU policymakers,
who have consistently said euro applicants must link their currencies
for at least two years to the euro within the Exchange Rate Mechanism
(ERM-2) without severe tensions -- meaning their currencies fluctuate
in a narrow band of roughly plus or minus 2.25 percent around a central
rate against the euro.
They also must bring down their inflation rates, reduce their budget
deficits and get their economies and interest rates closely in line
with those of the euro zone nations.
While the future EU members all agree they must speed up reforms and
get their economies into shape, they disagree over how best to do that.
Poland, for instance, vigorously argues it will be best be able to improve
its economy by adopting the euro quickly.
A number of accession countries at the East-West conference on European
expansion convening in Vienna Monday said they fear speculative currency
attacks if they enter ERM-2. Most countries said they would prefer quick
entry into the euro currency, even bypassing the ERM-2 process altogether.
"ERM-2 is not the best way to introduce deep reforms. You can be
subject to a lot of shocks," said Elana Kohutikova, deputy governor
of the National Bank of Slovakia at a panel discussion on ERM-2.
"For Poland, it doesn't seem to be a useful framework," said
Adam Czyzewski, director of macroeconomic analysis at National Bank
of Poland, whose country would like early euro adoption.