Estonia on final countdown to euro adoption
With only one and a half month to go before the introduction of the euro in Estonia, the Commission today assessed the state of its practical preparations for the changeover. The Commission concluded that Estonia’s preparations are well advanced, while recommending further efforts in some areas during the final phase of the changeover. Estonia will be the 17th member of the euro area and will bring to 330 million the number of people in the European Union who share the single currency.
The Commission today adopted the eleventh regular ‘Report on the practical preparations for the enlargement of the euro area’. It focuses on Estonia, which will adopt the single currency on 1 January 2011.
“I am looking forward to welcoming Estonia in the euro area in January. The preparations in the financial sector are well advanced and the authorities are informing the public about the euro. I am confident everything will go well and I am convinced that Estonia will continue to pursue the stable and sound budgetary and macro-economic policies that will enable it to take full advantage of the euro”, said Olli Rehn, European Commissioner for Economic and Monetary Affairs.
Estonia has ordered around 45 million banknotes and 194 million coins to introduce the euro in cash. The banknotes will be borrowed from a National Central Bank in the euro area (Finland), in line with the practice in the recent changeovers. The euro coins are provided by the Mint of Finland following a public tender procedure.
The Central Bank of Estonia will start providing euro banknotes to commercial banks (so-called frontloading) in mid-November. The frontloading of euro coins started already in mid-September. As from 1 December 2010, all those retailers and businesses that have signed a specific contract with their bank will also be provided with euro cash. . All professional euro cash transports will be assured with the highest security.
As from 1 December 2010, 600,000 ‘euro coin mini-kits’ will be on sale at banks and post offices for people to by them in advance of the changeover. They will also be able to exchange their kroon cash holdings free of charge at the official conversion rate (1 EUR= 15.6466 EEK).
During the first two weeks of the changeover, Estonian kroons and euro will circulate in alongside each other. . Shops are however expected to give change in euro only whenever possible. This is important in order to speed up the changeover and reduce the cost of having to handle two currencies simultaneously.
In order to address consumers’ concerns about price increases and abusive practices in the changeover period, a Fair Pricing Agreement was launched at the end of August. The subscribers to the Agreement (e.g. retailers, financial institutions, local governments, internet shops etc) commit not to increase their prices without justification during the changeover to the euro and to respect the changeover rules. This is a very important initiative and special attention should be paid to improve its coverage, especially among small and medium-sized companies.
According to the latest Eurobarometer survey, carried out in September 2010, there has been an important income in the degree to which respondents in Estonia feel informed about the euro in comparison with May 2010, with 65% now feeling well informed (+15pp). This is encouraging, but efforts need to be pursued in order to reach all Estonian residents, in particular vulnerable groups, in time with the necessary information.
A staff working document attached to the report looks at the state of preparations in the other Member States that have not yet introduced the euro (except UK and Denmark that have a formal opt-out from the single currency)
=Estonia at a glance=
Estonia joined the European Union in 2004 and will adopt the euro on 1 January 2011
Surface area: 45 230 km2
Population: 1 340 341(Eurostat 2009)
Joined the European Union: 1 May 2004
Currency: kroon (EEK). Euro as of 1 January 2011
=Euro information=
Status: As of 1 January 2011, Estonia will be a member of the euro area. The kroon joined the Exchange Rate Mechanism (ERM II) on 28 June 2004 and observed a central rate of 15.6466 to the euro with standard fluctuation margins of ±15%. On 13 July 2010 the Council gave its green light to the adoption of the euro by Estonia on 1 January 2011.
Fixed conversion rate: €1 = 15.6466 Estonian kroonid
Adoption of the euro: Estonia will adopt the euo as of 1 January 2011
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