July 23rd, 2008 14:26 EST
Slovakia on the edge of Euro
With only 5Â½ months to go before the adoption of the euro, Slovakia`s preparations are quite advanced but further efforts are necessary. Slovakia last week received the final and formal approval for adopting the euro on 1 January 2009 and the conversion rate was set. It must now concentrate on ensuring that the population and businesses are well prepared and the changeover takes place smoothly.
"Now that it has obtained the green light for the euro, Slovakia must concentrate on finalising the preparations to ensure that the changeover to the euro on the 1st of January is a smooth affair. It must use the remaining months to make sure that consumers and enterprises are fully ready to use the euro from day one and that the retail sector undertakes and implements fair-pricing commitments," said Economic and Monetary Affairs Commissioner JoaquÃn Almunia.
The Commission today adopted the seventh regular `Report on the practical preparations for the enlargement of the euro area`. The report focuses on Slovakia, which will adopt the euro on 1 January 2009. The conversion rate has been set at 30.1260 Slovak crowns to the euro.
The practical preparations have been entrusted to the National Coordination Committee and the Government Plenipotentiary for the Introduction of the Euro. The Commission suggests that Slovakia reinforces the coordination structures to ensure that they work efficiently and are able to solve any problems diligently.
Preparations of the financial and banking sectors are well advanced. The euro coins - a total of 500 million pieces has been foreseen - will be minted by the national Mint at Kremnica, a town in the centre of Slovakia whose minting traditions go back many centuries. The designs of the national sides that were selected by a popular vote can be seen at:
The amounts of banknotes ordered by commercial banks so far are relatively low: only 27% of a total of 188 million estimated to be needed by the NBS, compared to 92.5% in Malta and an average of 67% for the first group of euro area countries at a similar point in time. To ensure a smooth introduction of euro cash, it is absolutely essential that banks and businesses should be supplied with banknotes and coins before â‚¬-day. Businesses themselves appear to be late in planning for the quantities of cash they will need to be able to give change in euro from day one and avoid queues at banks. Additional efforts with a view to increasing the frontloading volumes to banks and sub-frontloading to businesses should, therefore, be made.
Regarding â‚¬-day itself, the banks plan for extra opening hours in the first days of January 2009, including, in some branches, special counters for businesses. The NBS and the commercial banks also plan to distribute mainly small denomination banknotes (â‚¬10 and 20) at automated cash points and over-the-counter to ease the changeover.
In order to get familiar with their new currency, Slovak citizens will have the possibility to buy mini-kits as of December. A total of 1.2 million such kits have been ordered, but this may prove insufficient. The experience from the previous changeovers showed that each household buys approximately one mini-kit. Slovakia has some 2 million households and a total population of 5.4 million.
The Commission strongly believes businesses should be encouraged to sign the `Ethical Code` of conduct devised by the Government Plenipotentiary together with the Association of Slovak Entrepreneurs, undertaking to respect the conversion rules. This is to address consumers` fears of price increases during the changeover.
The Slovak Trade Inspection (SOI) will be in charge of controlling that the rounding rules are respected and prices correctly converted and displayed in both currencies until end 2009 as planned by the government. The SOI has the power to deliver warnings and charge penalties of up to â‚¬ 60,000 in case of breaches. It is important that it has sufficient resources to carry out these tasks. However, administrative price regulation or equivalent market distortive measures would better be avoided as such practices would only delay the normal price adjustments arising from the evolution of world markets that would inevitably occur in one shot at the end of the freezing period.
The euro information campaign has intensified in recent months and is already wielding results with some 64% of Slovaks saying they feel very, or rather well, informed about the changeover, according to a Flash Eurobarometer survey carried out in May, compared to 51% in September 2007. This is important to ensure the citizens embrace their new currency with full confidence. But although they are more familiar with the euro and with Economic and Monetary Union there is still a growing demand for information.
A separate survey that explored the state of preparations among Slovak enterprises, mostly SMEs, indicates that the majority are rather well informed and feel they are advanced in the preparations.
The full report and a separate staff working document taking stock of the preparations in the other EU Member States that have yet to adopt the euro, as well as the latest Eurobarometer surveys on the public and business opinion, can be found at:
 The period of dual display of prices ends at the end of 2009, but price controls are expected to continue well into 2010. The controls will be carried out either by mystery shoppers (special attention will be paid to small shops and shops in remote areas) or as a result of customer complaints, which will be collected via `euro` phone line, e-mail, fax or personally in the SOI regional offices. The results will be published locally every two weeks.