Transcript Euro: Great Thing for Slovakia in Bad Times!

Ten Years of the Euro – Inspiration for the
Czech republic
Euro: Anchoring Slovakia in the Turbulent
Times
Praha, November 25, 2008
Elena Kohútiková
VÚB, a.s.
Euro: Good Thing for Slovakia in Good Times…
 For Slovakia, benefits of the adoption of single currency were thought to
outweigh the costs by big margin even when the global economy was in full swing
financial and
transaction costs
administrative
costs
pros
forex risk
Long-term (20 year) increase of GDP by
7-20 %
costs of currency
changeover (split
over 5 years)
cons
0
0,1
0,2
(% GDP)
0,3
0,4
loss of
independent
monetary policy
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Euro: Great Thing for Slovakia in Bad Times!
 The current global financial crisis makes the pros v. cons calculations
even more convincing
 Indeed, thanks to the forthcoming adoption of the euro, Slovakia has
been to a large extent insulated from the pressure that storms our
neighbors.
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Anchoring the Currency
V4 currencies vs EUR (% vs. 1.1.2008)
11%
9%
6%
4%
1%
-2%
-4%
-7%
-9%
EUR/SKK
EUR/PLN
-12%
-14%
I-07
IV-07
VII-07
EUR/CZK
EUR/HUF
X-07
I-08
IV-08
VII-08
X-08
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Anchoring the Interest Rates
Spread of 10-year V4 bonds vs Bund
8.00
HU
7.00
PL
CZ
6.00
SK
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
VI-07
VIII-07
X-07
XII-07
II-08
IV-08
VI-08
VIII-08
X-08
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Anchoring the Rating
Government bond rating
Aa2
Aa1
Outlook
Aa2
Aa3
A1
Hungary
Negative
Czech Rep.
Positive
Poland
Stable
Slovakia
Positive
A2
A3
Baa1
Baa2
Baa3
Ba1
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
Ba2
6
Boosting Reforms and Real Convergence
GDP per capita in V4 countries (in PPP, EU27=100)
85
80
75
70
65
60
55
50
45
Czech Republic
Hungary
Poland
Slovakia
40
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
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