The country that still loves the euro: Latvia

RIGA - Agencve France-Presse

Latvian FM Edgars Rinkevics (L) talks to his Estonian counterpart Urmas Paet.

The European single currency may currently be unloved by many of the people using it thanks to the ongoing debt crisis on the continent, but there remains one small outpost of euro-enthusiasm.

Far away from the corridors of the European Commission and European Central Bank, the Baltic state of Latvia is gung-ho about swapping its currency, the lats, for the euro.

The plan is to meet all the Maastricht criteria governing euro adoption by the end of this year in order to qualify to switch from the lats to the euro in January 2014.

“We have to be ready, regardless of what happens with Greece or in other countries,” Finance Minister Andris Vilks told AFP. “We are focusing and have a good chance to enter a eurozone that will be much more disciplined and prepared for shocks in the future,” he said.

‘Cannot miss opportunity’

“Everything that’s happening at the moment is good, whether it’s fiscal union, in banking or whatever. We cannot miss this opportunity.” Struck by the world’s deepest recession in 2008-2009, Latvia imposed a draconian austerity drive in part to ensure it could hold its course to meet the Maastricht criteria, which are meant to ensure robust public finances.

Another goal was to maintain the lats’ peg to the euro, a longstanding plank of Latvia’s economy policy.

But even if Latvia meets all the criteria so routinely flouted by existing eurozone members, the European Commission and ECB must both give their assent.

The fact that neighboring Estonia was admitted to the troubled eurozone in 2011 under similar circumstances would make any refusal highly controversial.

Euro-enthusiasm is even stronger at the Latvian central bank than it is in government.
This week the bank hosted a discussion of the subject that emphasised the expected benefits of eurozone accession, with little time given to possible risks.

“We are now placed quite comfortably in terms of meeting the Maastricht criteria,” Uldis Rutkaste, the bank’s head of monetary policy, told AFP on the sidelines of the event.

According to Rutkaste, more effort needs to be made to spread the message about the benefits of euro adoption.