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Katowice 2 June 2010

Euro in Slovakia 1 st Year With the Common Currency And Its First Effects Igor Barát Member of the Board, Poštová banka, Bratislava Plenipotentiary of the Slovak Governement for the Introduction of the Euro (2007-2009). Katowice 2 June 2010. January 2009: Slovaks with the new currency.

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Katowice 2 June 2010

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  1. Euro in Slovakia1st Year With the Common Currency And Its First EffectsIgor Barát Member of the Board, Poštová banka, BratislavaPlenipotentiary of the Slovak Governement for the Introduction of the Euro (2007-2009) Katowice 2 June 2010

  2. January 2009: Slovaks with the new currency • General atmosphere calm and positive • High level of public awareness • Enough cash • ATMs, POS operational • No technical or organisational limits • Mandatory double pricing • Dual circulation till 16 January • Extended hours in banks for cash exchange • Technically: • Macro impact: • Price increase by • 0,12 – 0,19 % (NBS) • 0,24% (MoF) • Less than Malta, Cyprus, Slovenia (0,3 %) • Unjustified jumps in prices not registered • Some insignificant cases found in restaurants, hotels, cafés, services

  3. External Factors Dominated in Early 2009 • Gas Crises in January – (dramatic drop in RU gas supply) • 80% of industry stopped or significantly limited production • Most of the economy in crises and emergency regime • Outburst of the global financial and economic crises • Drop in foreign demand • Depreciation of CZK, PLN, HUF up to 30% to the Euro • „Shopping tourism“ of Slovaks • Decrease in passive tourism • Difficult to abstract the immediate impact of the euro • from other factors GDP -4,7%

  4. Maastricht Criteria Source: Eurostat, European Commission, MF SR, NBS

  5. Inflation remains among the lowests

  6. GDP Growth

  7. Direct (immediate) benefits Exchange rate stability/elimination of exchange rate risk lower costs of capital elimination of some transaction costs higher price transparency Higher comfort for people abroad Psychological aspects Indirect (long-term) benefits trade growth increase of FDI faster growth/increase of living standards/progress in real convergence Benefits of the Euro Adoption

  8. The introduction of the euro is/was... Focus Agency, SK

  9. Slovakia Has The Best Rating In The Region

  10. Medium-Term Outlook for Slovakia is more optimistic Source: Consensus Economics.

  11. Thanks for Your Kind Attention Igor Barát Member of the Board of Directors Poštová banka, a.s. Bratislava www.pabk.sk igor.barat@pabk.sk

  12. long-runGDP increase by 7-20 % Benefits vs. Costs

  13. Fiscal Deficit

  14. Fiscal Deficit

  15. ERM II Exchange Rate Development • Nov 2005 ERM II entry 38,4550SKK/EUR • Mar 2007 1. revaluation 35,4424 -7,83% • May 2008 2. revaluation 30,1260 • -21,66% • July 2008 conv. rate 30,1260

  16. Euro Cash Frontloading • Banknotes • 188 million ( 7 b.€) • obtained thru ESCB/OeNB Vienna • 51 million (950 mil €) subfrontloaded to banks • Coins • 499 million (150 mil. €) • Minted in Kremnica Mint, Slovakia • 283 million (98 mil €) subfrontloaded to banks • Starter Kits for households and SMEs • Set 45 coins worth 16,60 € (500 SKK) • 1,32 mil produced and sold

  17. Information campaign Domestic sources 6,2 m EUR European Commission 1,8 m EUR Total costs 7,9 m EUR • In cooperation with professional agency: Creo/Young & Rubicam • Information campaign for general public started in January 2008 • Lasted till end February 2009 • Partners: EC, ECB, OeNB, domestic institutions 22% 31% 47%

  18. Euro myths and fears • „Euro = „teuro“ = price jumps“ • „Euro helps businesses, not ordinary people“ • „We´ll face psycho shock“ • „We´ll need pouches“ (europurses) • „Seniors will face serious problems“ • „We´ll become poorest euro nation“ • „Neighbours are smarter – they wait“

  19. Published • Daily newspapers (paid) • Leaflets • NBS website • Partner websites • Media support • Voting options • Phone call (paid) • SMS (paid) • Internet (free) • RESULT: • Over 140.000 votes

  20. Saturation with information Do you have enough information about the euro changeover (Slovak Stat´s)?

  21. Public opinion on the euro What will euro mean for you, personally? (Slovak Stat´s)

  22. Hurdles and troubles • Everybody needs more money, staff... • Public procurement process • Short time for minting, sub/frontloading • Slow legislation – amendments, modifications, exceptions • Public sector is always slower • Public myths to be fighted („teuro“, coins....) • Always possible to find arguments against Good Reasons

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