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Slovenia Business Week no. 04: Euro Conference Stresses Benefits, Challenges of Euro

A conference held as part of official euro celebrations was told that Slovenia stands to enjoy extensive benefits from adopting the euro, although it must also be mindful of the challenges ahead

A conference held as part of official euro celebrations in Ljubljana on Monday, 15 January was told that Slovenia stands to enjoy extensive benefits from adopting the euro, although it must also be mindful of the challenges ahead.

Slovenian central bank Governor Mitja Gaspari said in his keynote address that the euro was an opportunity for the country to build a stable economic and financial environment.

European Central Bank (ECB) President Jean-Claude Trichet said the benefits of the euro included no exchange rate risks with respect to its main trade partners, price transparency, protection against financial disturbances and the benefit of stability-oriented policy from the ECB.

While the officials were full of praise for Slovenia's speedy adoption of the single currency, warnings could be heard about the challenges that face Slovenia in the future.

Gaspari said that "whether and how we will succeed in further developing all that we have achieved in the past years does not depend on the euro, but on ourselves."

European Commissioner for Economic and Monetary Affairs Joaquin Almunia expanded on this by stressing the need for low inflation and long-term sustainability of public finances.

He said Slovenia must continue to pursue anti-inflationary macro-economic policies and "make use of the currently favourable economic climate to accelerate the ongoing fiscal consolidation process."

The officials made a point of the risk posed by the ageing population in Slovenia, with Almunia saying that demographic trends in the country placed "the long-term sustainability of public finances in the high-risk category".

The ageing population was also the main issue debated at the first of two panels held at the conference.

Servaas Deroose, the head of the directorate for the macroeconomy of the eurozone and the EU at the Economic and Financial Affairs Directorate, told the panel that Slovenia faces fiscal policy challenges in order to tackle pressures on the budget related to ageing.

Finance Ministry State Secretary Ziga Lavric was sanguine, saying that Slovenia was aware of these issues and preparing appropriate solutions, whereby it was looking to achieve "national and social consensus".

This was echoed by Finance Minister Andrej Bajuk at a press conference with Almunia held at Cankarjev dom conference centre, the venue of this evening's large ceremony welcoming the euro to Slovenia.

"It is high time that Slovenia becomes involved in the debate on where we stand, what our future looks like and what can be done in order to provide our children with a future similar to the situation today," Bajuk said.

Meanwhile, Almunia hailed Slovenia's successful bid to join the eurozone as extremely important for the EU given that Slovenia was the first country to take this leap following the beginning of the single currency's circulation in 2002.

A similar view was made by Jean-Claude Juncker, prime minister of Luxembourg and the head of the eurogroup, in his address to the conference earlier in the day.

For Juncker, Slovenia's adoption of the euro is also an opportunity for the other members of the eurozone to recall the benefits as well as added responsibilities of membership.

He also called for enhanced surveillance and coordination of economic policies in the eurogroup. This is crucial in order to ensure "the cohesion of the eurozone".

Meanwhile, at a separate press conference, Trichet was reluctant to speculate on when other countries might join the 13-member euro club.

"They are welcome," he said, adding that the eurozone was not a closed club provided that criteria are met. The fulfilment of convergence criteria is in the interest of member states as well as the eurozone as a whole, he said.

He also issued a renewed call for the abolition of restrictions on Slovenian workers in the EU in the light of Slovenia's membership of the eurozone.

The free movement of labour is a "natural feature" of the single market and the single European currency. There is "very strong economic underpinning" for this, Trichet said.

Meanwhile, the second panel at the conference examined the role of the public in the adoption of the euro, with participants concluding that the cooperation from the public was the key to the successful switch.

Jose Manuel Gonzalez-Paramo, member of the Executive Board of the European Central Bank, noted that the truly successful operation may be attributed to a large extent to the borrowing of best practices from the 2002 cash changeover.

Also crucial, according to Breda Kutin, the head of the Slovenian Consumers' Association, was the fact that the consumer organisation took part in the preparations from their earliest phase, including in the drafting of laws.

Meanwhile, Banka Slovenije officials told the press that following the fortnightly period of dual euro-tolar circulation, almost all tolars have already been delivered to banks.

Central bank Governor Mitja Gaspari explained on the margins of the conference that 90% of tolars in circulation had been collected by the banks, while only some SIT 10bn-worth (EUR 41.7m) remain in the pockets of consumers.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency