No rush to adopt euro

The target for Romania’s adoption of the single European currency should not be set sooner than 2010-2011, believes NBR Governor Mugur Isarescu.

He says some members of the current Board of Governors of the central bank are more pessimistic than this, and see it happening somewhere in 2012-2014

Isarescu says Romania could not be more ambitious than a country like the Czech Republic, for example, which aims to adopt the euro by 2009-2010. Before adopting the euro, Romania will move to a hard ROL next summer. The new currency will have four of its zeroes removed and will have an exchange rate of around 4 ROL/EUR, making it easier to adopt the single currency.

Of the ten new EU members, Lithuania is most eager to adopt the euro, which it plans to do by mid 2006. Its decision is understandable in that it uses a monetary council regime, which relies on the euro as the anchor currency, and shifting to the euro represents the optimal way out of this rigid monetary framework.

The same is true of Estonia, which has set its entry target for 2007, as has Poland, Slovakia, Slovenia and Cyprus. Isarescu said the first step in adopting the euro is a monetary policy that focuses solely on inflation control, which will start next year.

“The sustainability of convergence to the euro depends on the constant, permanent progress of structural reform, fiscal consolidation and the reduction of arrears, and the promotion of responsible salary policies that will be the main pressure factor in coming years,” the head of the central bank said.
razvan.voican@zf.ro