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FinMin: Concerns About Price Hikes Due to Euro Adoption Proved False
Wednesday 03 February 2010 Zoom in | Print page
Bratislava, February 3 (TASR) - Price developments in Slovakia in 2009, the year in which the euro currency was introduced, proved concerns about price hikes to be unjustified, according to an assessment report on the impact of the euro on Slovak society presented by the Finance Ministry to the Government on Wednesday.
"Although Slovakia has lost the possible advantage of the beneficial influence of exchange-rate strengthening on inflation, it currently has the lowest inflation in its history," reads the report. Estimates by the ministry and the Slovak central bank (NBS) show that the overall influence of the euro on inflation reached between 0.12-0.19 percentage points, which corresponds with the experience of other countries that previously introduced the euro.
According to the ministry, possible price increases were prevented thanks to a comprehensive system of consumer protection.
The ministry claims that the stable common European currency has increased the overall economic stability of Slovakia and created beneficial conditions for long-term business decisions. The ministry also states that the direct advantages of euro adoption, such as removing transaction costs and eliminating a significant proportion of exchange-rate risk, should in the long term lead to broader indirect positives. In particular, it should bring additional inflows of foreign direct investments and increase Slovakia's international trade, which should result in the whole economy growing faster and an increase in living standards, something that has been hampered by the economic crisis so far, however.
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