Transcript Inflation criterion: Slovenia 2004

Before and After Maastricht:
The Case of Slovenia
Boštjan Jazbec
Member of the Governing Board
Bank of Slovenia
Tabor, 23 May 2008
Views expressed are not necessarily views of the Bank of Slovenia.
Outline
Problems with Maastricht Criteria Fulfilment
Exchange Rate: Shock Generator or Absorber?
Before and After Maastricht
The Case Study: Slovenia
Strategies for Euro Adoption
Wait for Real Convergence to Take Place
Benefits of Euro Adoption?
Beat the Mastricht Inflation Criterion by
Exchange Rate Manipulation
Entusiasm for Inflation Targeting
Economics or Politics?
Change of Maastricht Criteria requires change of Treaty
Problem with ECB Governance
The Case of Slovenia
May 2004: Entry to EU
June 2004: Entry to ERM2
January 2007: Adoption of Euro
Real Convergence Story?
Where Do We Stand Today?
Catching-up Process
Inflation Criterion: Slovenia 2004 - 2008
Is this Balassa-Samuelson Effect?
Structure of HICP
Food Prices in Slovenia and EMU
Activity, Employment and Wages
GDP Growth by Components of Expenditure
Contributions to Employment Growth
Financial Deepening
Lending to Domestic Private Sector
Interest Rates in Slovenia
Loans to Non-financial Corporations
Loans to Households
Financial inflows
Current Account Development
Conclusions
Maastricht Inflation Criterion
Benefits of Euro Adoption
Financial Stability Issue
At least we cannot have exchange rate and B-o-P crises