Transcript Slovenian Approach to EMU

Euro Adoption in Slovenia
Boštjan Jazbec
Member of the Governing Board
The views expressed are those of the author and not necessarily those of
the Bank of Slovenia.
Contents
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Macroeconomic Stabilization and Transition
Macroeconomic Perfomance
Maastricht Criteria
Entry to ERM2 and Adoption of Euro
Conclusions
Macroeconomic Stabilization and
Transition
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Better initial conditions than in other transition economies
Money-based stabilization program
Rehabilitation of the banking sector
Sound macroeconomic performance
Inflation and Exchange Rate
Slovenia vs. Greece vs. Portugal
Synchronization of Business Cycles
10
0
-10
-20
Slovenia
EU
Germany
-30
2002
2003
2004
2005
2006
Inflation Criterion Fulfilment
8
Inflation (current)
Inflation (12-monthly average)
Criterion reference value
7
6
5
4
3
2
1
(year-on-year rate, %)
0
2003
2004
2005
2006
Country Risk Premium
Exchange Rate Development
240,0
0,15
Spot rate
Exchange office rate
Central rate
EUR/SIT
239,9
%
0,10
239,8
0,05
239,7
0,00
239,6
-0,05
239,5
239,4
-0,10
j
a
s
o
n d
2004
j
f m a m j
j
2005
a
s
o
n d
j
f m a
2006
Unemployment
Euroization of Bank Assets and Liabilities
50%
Foreign currency liabilities / total liabilities
Foreign currency lending / total lending
40%
(%)
30%
20%
10%
2003
2004
2005
2006
GDP Composition by Activity
Maastricht criteria at the time of fulfilment
CONVERGENCE
CRITERIA
Fulfiled
criteria
Reference value
Price stability
Public finances
Exchange rate
Interest rates
Inflation
(12 month
average, %)
Government
Government debt
balance (% BDP)
(% BDP)
Participation in
ERM II
Long term
interest rate
(12 month
average, %)
May 2006
2005
2005
May 2006
2,7
-3,0
60,0
2 years
5,9
Czech Republic
4
2,1
-2,6
30,5
no
3,5
Estonia
4
4,2
1,6
4,8
since 28.06.2004
3,9
Cyprus
3
2,0
-2,4
70,3
since 02.05.2005
4,4
Latvia
3
6,9
0,2
11,9
since 02.05.2006
3,7
Lithuania
4
2,9
-0,5
18,7
since 28.06.2004
3,7
Hungary
1
3,0
-6,1
58,4
no
6,6
Malta
1
2,8
-3,3
74,7
since 02.05.2006
4,4
Poland
4
1,3
-2,5
42,5
no
5,0
Slovenia
5
2,4
-1,8
29,1
since 28.06.2004
3,7
Slovakia
3
3,5
-2,9
34,5
since 28.11.2005
3,6
United Kingdom
3
2,1
-3,6
42,8
no
4,3
Denmark
4
2,0
4,9
35,8
yes
3,4
Sweden
4
1,2
2,9
50,3
no
3,4
EU-12
2,3
-2,4
70,8
3,5
EU-25
2,3
-2,3
63,4
3,7
Notes:
Grey background indicates fulfilment of the criteria.
Timetable for Euro
Financial intermediation
Catching-up process
Slovenian financial sector (total assets)
Increasing indebtedness
Growth rates of loans
Capital adequacy indicators for
Slovenian banks
Challenges ahead
• Inflation
• Keeping competitiveness
• Financial sector development
• Labor market reforms
Sources:
Financial Stability Report
Price Stability Report
www.bsi.si