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Slovakia 16th country to adopt euro

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Jan. 1, 2009, 10:01 a.m. |
To the sound of midnight fireworks and pealing church bells, Slovakia joined the eurozone, putting it under the shared currency's protective umbrella amid a world financial downpour and underscoring the former Soviet bloc nation's economic progress. The small alpine nation on Thursday became the 16th country to adopt the euro, a European Union project which also celebrated its 10th birthday this New Year's Day. With Slovakia, the currency will be used by 330 million people with an annual gross domestic product of more than 4 trillion euros ($5.6 trillion).

Joining up is a milestone for the country of 5.4 million people in a region where others have seen their currencies buffeted by the financial crisis stemming from bank losses on securities backed by shaky U.S. mortgages.

Slovak Prime Minister Robert Fico welcomed the euro, but his comments were tinged with a touch of nostalgia.

"We're saying good bye to the Slovak currency that meant so much to us," he said. "Part of us, the Slovak identity, is leaving."

Still, he added that he thought Slovakia's acceptance of the euro was a rite of passage that "will forever integrate us into the good old, prosperous Europe."

"At the moment of the economic crisis, (the euro) is a confidence boost for us," said Fico, in sentiments echoed by experts.

The new currency "could help the Slovak economy to cope with the economic downturn, and when it's over start new growth," said Marek Gabris, an analyst at the CSOB bank in Bratislava.

Fico was among the first Slovaks to slip the new bills into his wallet, pulling five crisp 20 euro notes out of an automated teller machine set up at Slovak parliament.

Judging from their comments, revelers thronging the cobblestoned streets of Bratislava's historic Old Town for New Year's celebrations viewed the coming of the euro as one more reason to celebrate.

"I'm looking forward to having euros, you know, because we have a lot of friends in Austria and in other countries where I travel a lot to," said Sonja Jancikovo.

Others viewed Slovakia's embrace of the European currency not only as good for them but the country as a whole.

"It means it is much easier for foreign business" to function, said Martin Gehry.

Slovakia is adapting as some people in EU members Denmark and Sweden are rethinking their countries' refusal to sign up.

Neighboring EU member Hungary, once the beacon of economic success in the post-communist Eastern Europe, was forced earlier this year to accept a bailout from the International Monetary Fund to avert economic collapse, as has non-EU member Ukraine.

Iceland, neither an EU nor a euro member, suffered badly as an outsider, being hit with a combination of a plunging currency and the popularity of high-interest foreign currency loans. That means monthly loan repayments for cars and homes have doubled this year, jolting Icelanders as the economy teeters and jobs are slashed.

Katinka Barysch, an analyst at the London-based Centre for European Reform think tank, said the currency swings of recent months have underlined the benefits of the euro to east European states.

"The very stark experience of being in the middle of a global economic storm means they have felt very cold and uncomfortable," she said.

Slovakia is also the first nation that used to be in the Soviet orbit to join while Slovenia also was communist ruled, it was part of Yugoslavia, which kept its distance from Moscow.

The euro was introduced on financial markets on Jan. 1, 1999 and notes and coins first came into circulation in 2002. The zone widened to 15 nations this past January when Cyprus and Malta joined; the other members are: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland.

The old currency, the Slovak koruna, will be in circulation alongside the euro until Jan. 16 and banks are expected to open Thursday to exchange koruna for euros.

Associated Press Writer Karel Janicek contributed from Prague, the Czech Republic. AP Business Writer Aoife White contributed from Brussels, Belgium.
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