Nordic neighbour to get euro from January 2014
In seven months’ time, Latvia will have changed its national currency the lat for the euro. The European Union has given it the all-clear to adopt the euro from 1 January 2014.
For Latvia it is an achievement, coming just a few years after its people experienced one of the steepest economic contractions Europe has seen since World War II. It is the EU’s fastest growing economy this year. For the EU, it’s a signal to investors that the Eurozone is continuing to expand rather than disintegrate.
Latvia will be the 18th country in the EU to use the single currency. Neighboring Estonia adopted the euro in 2011. To the south, Lithuania aims to join the Eurozone in 2015. EU finance ministers will make the formal decision to endorse the positive recommendation of Latvia by the European Commission at a meeting on July 9.
“We have concluded that Latvia is ready to adopt the euro on January 1, 2014,” EU Economic and Monetary Affairs Commissioner Olli Rehn said at a news conference. “Latvia’s desire to adopt the euro is a sign of confidence in our common currency. Those who predicted a disintegration of the euro […] were simply wrong.”
He added: “Experience in Latvia shows that a country can successfully cope with very serious macroeconomic imbalances and come out stronger on the other side.”
Latvia meets all five Eurozone entry criteria, namely low inflation, low interest rates, low public debt, low deficits and a stable exchange rate. The European Central Bank also gave Latvia a positive assessment, but it warned that high foreign deposits in the country’s banks were a risk to stability.
[image courtesy ECB]