Print

Mail

wiki links

Euro replaces the tolar in Slovenia

Slovenia adopted the euro yesterday, becoming the first former communist state to join the EU's common currency.

Central bank governor Mitja Gaspari made the first withdrawal of euros from Slovenia's central bank, holding up 10, 20 and 50 euro notes, as well as some Slovenian euro coins, to watching reporters.

Slovenia is the 13th EU state to use the euro.

Its adoption of the common currency comes five years after euro bills and coins were introduced, almost three years after Slovenia acceded to the EU, and 15 years after Slovenia declared independence from the former Yugoslavia.

The euro replaces the tolar, a currency introduced in 1991 as a symbol of the tiny country's independence and an instrument aimed at cutting Belgrade's monetary control over the Slovenian economy.

"We are replacing something good, with something even better," Slovenian Finance Minister Andrej Bajuk said on Friday as he announced that preparations for the changeover had concluded.

Under the exchange rate, one euro will equal 239.64 tolars.

"The euro isn't important only for our economy, we also expect psychological benefits ... we are coming closer to the most developed part of the EU and this will give [citizens] confidence," Slovenian Prime Minister Janez Jansa said in a recent interview.

Accession to the eurozone is a coup for Slovenia as it is the only one of the 10 countries -- eight former Communist states plus Malta and Cyprus -- that joined in 2004 to have met the tough Maastricht criteria on public finances, inflation, interest and exchange rates that are required for newcomers.

After EU finance ministers gave Slovenia the green light last July to join the euro, the government and central bank had to carry out wide preparations for the switch, such as minting Slovenian euro coins and distributing bills to banks.

"I believe we are well-prepared," Gaspari said on Friday. "There will be no trouble concerning cash in circulation."

The central bank plans to put into circulation around 1 billion euros (US$1.3 billion) in bills and coins to replace the 215 billion tolars (some 900 million euros) currently circulating in this central European state of 2 million people.

Banks were closed on Saturday and were to re-open tomorrow, with the exception of 52 bank offices in 42 cities and towns that were due to open yesterday and today to change tolars into euros.

The changeover to the single European currency foresees that tolars and euros will circulate simultaneously for only the first two weeks of this month.

To prevent a rounding upward of prices as has happened when other nations changed over to the euro, the government introduced last March the double labelling of prices, in euros and tolars, and this will remain in force for six months.

Despite this measure, inflation last month increased by 0.4 percent from the previous month, pushing 12-month inflation, in unadjusted terms, to end at 2.8 percent, compared to 2.3 percent registered in December 2005.

Slovenia's Consumer Association reported on Friday that during the last week before the changeover prices in some fast-food restaurants in the capital Ljubljana increased between 6 and 20 percent and prices for parking in the center of the city were also expected to rise.

Cyprus and Malta are expected to follow Slovenia into the eurozone next year and Slovakia is aiming to adopt the single currency in 2009.

The Czech Republic is now aiming to join the euro in 2012 and Hungary in 2013.
This story has been viewed 1584 times.