Euro Currency Adoption:illegal Immigration in the United States of America

Purpose of the Briefing. To introduce the Minister of Finance of Lithuania Ms. I. Šimonytė with the process of euro adoption in Estonia and highlight lessons learned for the future changeover in Lithuania.

Historical Background

After meeting all Maastricht criteria, on January 1, 2011 Estonia joined the Eurozone.

Estonia lost independence of monetary policy as kroon was pegged to euro since 2004. Adoption of euro would protect the country from possible speculative attacks and financial destabilization. Liquidity management issues would be transferred to ECB, which was particularly beneficial for Estonia as a high share of loans was in foreign currency. (Zuzana Brixiova, Margaret H. Morgan, Andreas Wörgötter , 2010) Country’s credit rating was raised to A1 according to Moody’s (Moody’s Investors Service, 2011).

The adoption of the euro and the cash changeover took place at the same time. Kroons remained in parallel circulation for two weeks after the changeover. Shops were expected to give change in euros to speed up the process (Estonia's National Changeover Plan, 2010).

Following the experience of the recent changeovers, the euro banknotes were borrowed from a National Central Bank in Finland. The euro coins were provided by the Mint of Finland (Baltic Review, 2010)

Commercial banks were supplied with cash a month in advance before the changeover. Retailers and other business that have signed a specific contract with their bank were provided with cash from December 1, 2010 (Eurasia Review, 2011).

To accelerate the procedure and reduce public anxiety “euro coin mini-kits” were sold at banks and post offices from December 1, 2010, enabling people to buy new currency before the official changeover began (Eurasia Review, 2011). For the first six months after the changeover commercial banks were exchanging kroons to euros free of charge. The Bank of Estonia will continue this practice (Estonia's National Changeover Plan, 2010).

To ensure fair changeover, six months in advance before the changeover shops were obliged to display prices both in kroons and euros. Dual display of prices continued for the six months after the adoption of euro (Estonia's National Changeover Plan, 2010). For the same reason “Fair Pricing Agreement” was signed (Eurasia Review, 2011). The subscribers to the Agreement committed not to increase their prices without justification during the changeover to the euro and to respect the changeover rules (Estonia's National Changeover Plan, 2010).

Prior to the euro adoption the information campaign was carried out (Eurasia Review, 2011). It prepared the population for the changeover by emphasizing the practical aspects of the process and familiarizing them with the impact of the single currency on the national economy.

Current Status