A successful euro changeover in Latvia

Ivonna Orlova

From 1st January 2014 the official national currency of Latvia has become euro. According to dates provided by Latvian Finance Ministry the process of joining the euro zone in Latvia has been successful. Latvia started to prepare to this changeover 10 years ago and it seems that a careful preparation has borne its fruits – the first hours after joining had been smooth and with no major problems encountered.

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© Latvijas Banka

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Well Prepared ‘Homework’

One might say that Latvia had done its “homework” well last year and in this year it just relay on before carefully planned and organized work plan. And indeed, before Latvia joined the euro zone there was done a sufficient work ahead. For example most of the 106 IT systems have been equipped to deal with the euro already on December. The same as the adaptation system of the euro in local governments was done previously and with the start of the new year 30 000 active users in nine biggest towns were able to start their daily work using the euro currency. On 1st January 113 laws, 603 regulations of the Cabinet of Ministers and 1432 local binding rules successfully entered into force thanks to the previous preparations.

Latvia’s Key Steps toward the Euro Change Over

There are a couple of other very important steps taken long before the euro became an official currency in Latvia. The first thing, that has been made was to fix lats against the euro which was 1 EUR = 0.702804 LVL. Afterwards Latvia got the right to join the Exchange Rate Mechanism II or a multilateral agreement aimed at fostering exchange rate stability and coordination in Europe. The next key step was the development and implementation of two crucial projects, such as the Euro Changeover Project and the National Euro Changeover Plan. The last one, according to information by the Finance Ministry of the Latvian Republic “is aimed at identifying the key Euro Implementation Project tasksin Latvia, their implementation stages and spheres of accountability as well as defining the euro introduction principles and scenario.” The establishment of the Steering Committee has been helping to ensure an efficient euro implementation process and monitor the elaboration of the National Euro Changeover Plan.

Moreover, the euro changeover process in Latvia consists of the 3 main stages, such as:

  • the dual circulation period of the lats and the euro, when two weeks following the date of the adaption of the euro it has been possible to use both the lats and the euro. This period is already successfully over in Latvia, and since 16 of January the only official currency in Latvia is the euro.

  • the next stage or the period of the lats cash exchange to the euro, which will last for six months following the euro has been adopted and during this period day gives a possibility to convert the last lats cash reserves to the euro in all commercial institutions. After this period the lats will be possible convert only in the Bank of Latvia.

  • And the last stage will start when all prices will be displayed in the lats for euro, which will last for a quarter before and half a year after the euro adoption and it is called as the period of dual price display.

Till now Latvia has rather productively passed the first stage thanks to it careful planning before and it seems that the last two stages will not be a problem as well.

Formula of Success

A few reasons should be mentioned that became like a formula of success for completion of the first stage and hopeful beginning of the second period of the euro changeover process in Latvia. First of all as it was mentioned by the president of the Association of Latvian Commercial Banks Mārtiņš Bičevskis“the smooth work of Latvian commercial banks in the first stage of the euro changeover, were possible thanks to banks close cooperation with their clients and in its turn the positive response of the clients to the banks.”

On the other hand, according to the director executive of the Latvian Food Traders Association Noris Krūzītis– the successful work of merchants and entrepreneurs depended on “the ‘homework’ done by each merchant before, such as the reprogrammation of cash registers and adoption of IT systems or careful planning of collection and exchange of the money supply, as well as the training of the shop-assistances long before the euro adoption.”

The possibility to change previous currency in post offices, the State Police and other organizations mobilized work to maintain security process during the changeover and the Consumer Rights Protection Centre’s monitoring over the proper price calculation from lats to euro are another causes for the smooth changeover process in Latvia.

Positive Future Vision

The future with the euro in Latvia seems rather positive and there are several advantages that came after adoption of the euro. It is essential that after the euro adoption Latvia is joining the Single Euro Payments Area (SEPA), that will establish more convenient, cheaper and faster banking transactions for citizens and entrepreneurs all over the euro zone.

According to the published articles by Finance Ministry of Latvian Republic “The euro is a working tool that will help our country to attract more investments and enhance economic development. It will help to raise the standards of living and promote the prosperity. And it will also help to travel without extra spending because of changing currencies.” However, there is always some fly in the ointment, or in this case it was an obvious mistrust of people to the euro as a stable currency and the support for adoption of the euro in society of Latvia was rather low. According to Eurobarometer survey on December 2013, only 53% of all citizens of Latvia supported the euro adoption. On the other hand, the Finance Ministry of Latvia, claim that soon after people saw all advantages of this common European currency in practice, they will quickly change their mind to more welcoming position.

Let’s hope that this mistrust in eyes of Latvia’s citizens in the end of previous year, will be the only little unpleasant thing in whole changeover process, but the positive example of how to smoothly adopt the euro and the formula of success will be passed to the next euro zone states, for example – to Latvia’s neighbor Lithuania, who are planning to adopt the euro on the year 2015.

Did you know that…

  • The euro is used daily by more than 320 million people

  • All banknotes of the euro have different colors : the 5-euro note is grey, the 10 is red, the 20 is blue, the 50 is orange, the 100 is green, the 200 is yellow and the 500 is purple

  • Finland decided not to use 1 and 2-cent coins because such low coins weren’t used any more with the former currency, the Finnish Mark. However, they’ve issued such coins in a very small series and their value could reach euro 10 on the numismatic market

  • The very first country that produced the euro coins was France

  • There are 17 the euro zone states, and Latvia became the 18th state of the euro area

  • Despite the fact that the official name of euro zone currency is the euro, it has its local names, for example in Latvia it is called Eiro, in Finland – Ege, in Germany – Teuro or Eurone, but in Greece it has rather tuneful name such as Europoulo

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