Will Estonia get a green light for the transition to the euro?
The Riigikogu Toimetised conservation circle on 20 November discussed the transition to the common currency of the European Union, the euro, which Estonia firmly wants to join in the coming years. The participants in the conversation circle were Estonian Minister of Finance Jürgen Ligi, former Minister of Finance and current member of the board of Tallink Hotels group OÜ TLG Hotell Aivar Sõerd, Eesti Pank monetary policy department head Ülo Kaasik, and Estonian Development Fund adviser Heido Vitsur. The debate was moderated and summarized by RiTo editor-in-chief Helle Ruusing.
Even though meeting the criteria for EMU accession has required and continues to require great exertion from the state, the participants found that it was worth the effort, as these criteria would in fact be a fairly good framework for any economy. We want stable prices as well, noted participants, and we have nothing against being sustainable and receiving affordable loans; we are interested in continuous monitoring of these criteria, and are against making discounts to member states in this regard, so that confidence in the euro would remain high. At the same time, the participants did not neglect to emphasize that the common currency is not a secret weapon that will fix everything in future by itself. On the contrary: the well-being of the economy will inevitably come down to how creative and successful our enterprises are, and will also depend on the stability of the environment in which they operate. After the transition to the euro, as shown by the experience of other countries, people will likely have to prepare for a certain minor rise in prices. But this would not outweigh the advantages that becoming a full member of the euro zone will confer, to say nothing of the risks we will leave behind after EMU. The main risk in the eyes of investors is the exchange rate risk. While we believe the Estonian kroon is stable and will not be devalued, investors in places like Singapore may not be so sure; as a result they may put off their investment decision until there no longer is an exchange rate risk. In summary, it was found that the euro is a win-win situation, even if it does not instantly result in additional major investment in Estonia. Nor, in the big scheme of things, is it insignificant that many currency exchange fees will no longer be an issue both for individuals and firms, which will also make life somewhat easier and less costly.