Latviski English По-русски
Ceturtdiena 17.01.2019 | Name days: Tenis, Dravis

Opinion: Latvia’s five years in Eurozone should be considered successful

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn spite of the initial difficulties, Eurozone’s creation should be viewed as a story of success. Additionally, the five years Latvia has spent in Eurozone should be considered successful, says Bank of Latvia Council member Mārtiņš Kazāks.

At the same time, he admits that 20 years ago, when Eurozone was first established, many did not imagine how a complicated project it would turn out to be. «As the previous crisis had demonstrated, a number of problems were not resolved, as no one had expected them. We have to keep in mind that this is a very complicated project and that after 20 years it still exists, euro is the second largest international reserve currency, and the countries that have joined it have found success,» says Kazāks.

He also notes that after the last crisis there is still a lot left to do to improve Eurozone. Nevertheless, a lot has already been accomplished. The crisis also made it clear that Europe is interested in preserving the monetary union. «This does not mean everything is done. Riga is not yet ready. There are still many, many challenges ahead,» says Kazāks.

He stresses that membership in Eurozone is important for small and open economies like Latvia. «I would compare Latvia’s membership in Eurozone with insulating your home. There is less draft, and less warmth is lost. Still, it does not mean the house is warm. Getting a furnace is our own responsibility. With that, Eurozone does provide us with more comfort and protects us from many external threats, but making the house warm is for us to do,» says Kazāks.

He says analysis from the Bank of Latvia show that after joining Eurozone, Latvia has seen improved employment and investment volumes, as well as improved and better economic growth rates. Latvia has also become more stable after the crisis. Membership in Eurozone has also reduced Latvia’s openness to different speculative attacks.

The Bank of Latvia has analysed that the country’s credit rating’s increase by two stages has reduced the value of state bonds by 150 base points, which has helped Latvia save 0.6% of GDP over the past five years. Savings on currency exchange have amounted to EUR 70 million annually, which is roughly 1.5% of GDP over the past five years. If Latvia was outside of Eurozone, investments would have been 5% smaller, the number of unemployed people larger by 5,000, and GDP per capita – 164 euro smaller.

The member of Bank of Latvia Council also said the first five years proved that many of the warnings voiced five years ago about Latvia’s membership in Eurozone were no more than urban myths.

«But as for Eurozone not resolving all of Latvia’s problems… Well, of course! How can Eurozone help with improving Latvian residents’ health? How can Eurozone help with education quality? How can Eurozone help with taxes or regional policy? Eurozone is only one of the elements in the arsenal of tools accessible to us. With that, opportunities provided by Eurozone are very good. Nevertheless, we have to conclude that neither we in Latvia, nor Eurozone are sufficiently swift to use everything at once. There is still a lot to do,» says Kazāks.

As for the future of Eurozone, Kazāks stressed that reforms should be continued. «Eurozone is a monetary union, and it is therefore important for all players to play by the same rules. As we can clearly see, this is not the case. Eurozone contains very different economies. If we look at structural reforms more widely, we have to mention the labour market, productivity, business environment and a number of other matters. All countries have objectives – and it’s an endless road. Additionally, this does not depend on whether or not they are part of Eurozone. Eurozone plays a more important role than it would if they still had their own currency. If we look at Eurozone as a whole, the topical matters become clearly outlined – banking unions and the matter of a single capital market. Europe still plays a major role for banks and there is no shortage of market players. The finance market in Europe is very fragmented among different countries,» says the council member of Latvia’s central bank.

He also says Latvia’s recent experience in the banking sector and the report from Moneyval clearly show that money laundering and terrorism financing prevention lacks a joint Eurozone regulation.

«Still, if we look at this matter globally, Eurozone’s formation can be considered a story of success. Yes, there are some difficulties, but a lot has been done already to make Eurozone stronger and more resistant against crises. What will the future bring? We will see!» says Kazāks.

Leave a reply

Lithuania’s ruling majority swings at media freedom, experts warn

All media, the so-called fourth authority of power, has been facing some international challenges, with the European Parliament set to vote next Monday on final text of Article 13, the proposed EU directive on copyright, which, if implemented, could censor internet users and internet platform hosts through artificial intelligence-employing filters.

Riga Active Seniors Alliance: seniors’ behaviour on the road should be discussed

Riga Active Seniors Alliance supports Latvian State Police informative safety campaign that addresses the behaviour of pedestrians on the road. This campaign invites seniors to pay attention to their own behaviour to ensure safe movement without putting at risk other traffic participants.

New healthcare service principle’s adoption in Latvia postponed until July

The rights to receive healthcare services as part of state compulsory healthcare regardless of their health insurance contributions will remain available for residents until 30 June 2019, Latvian Saeima has decided.

150 jobs lost in Estonia as polluting power stations reduce operations

Estonian state energy giant Eesti Energia, which mostly generates energy from fossile oil shale plants will reduce its operations at the Narva power plants, resulting in 150 job cuts.

Opinion: Russia will definitely interfere with European Parliament elections

According to Latvian member of the European Parliament Inese Vaidere, Russia will definitely attempt to interfere with upcoming European Parliament elections.

In no-deal Brexit, border control in Ireland would be obligatory

In an interview with the British news portal The Guardian, Michael Lux, a former head of customs legislation and procedures at the European commission, said the UK would have to impose customs checks and tariffs on the northern side of the border, despite claims to the contrary by Brexiters.

Opinion: Daugavpils City Council doesn’t want emergency elections; to agree on new mayor

Daugavpils City Council deputies Rihards Eigims and Andrejs Elksniņš are afraid of voters’ opinion in regards to emergency elections. Because of that, they will agree on the next mayoral candidate at the 17 January meeting, said Latgale party representative Jānis Lāčplēsis.

Scientists suggest sustainable diet to save the planet and prevent premature deaths

An international group of 37 scientists has developed a diet that promises to save lives, feed 10 billion people and all without causing catastrophic damage to the planet.

Latvian parties taking too long on compiling government cooperation documents

Although work on the new government’s cooperation documents has taken more time than initially expected, Latvian prime minister candidate Krišjānis Kariņš still hopes for the government to be approved next week.

Ministry: more children end up in families in Latvia not through foster families or guardians

More and more children in Latvia end up in families not through adoption, but through foster families or guardians, says Welfare Minister’s office manager Linda Baļčūne.

Estonian population continues to increase, mostly due to immigration

Estonia has registered population growth for the third consecutive year as 4,690 more persons lived in the Baltic country on January 1, 2019 than a year before, official statistics show.

Sweden to nominate head of government, who could finally be confirmed

In the Swedish parliament, three parties have stated they would not vote against caretaking Prime Minister Stefan Löfven to have another attempt to form a center-left government after a four-month political crisis.

In 2018 Latvia experienced more rapid growth of car registrations than EU

Last year the number of newly registered cars in Latvia was higher than the average in the European Union, according to the latest data from European Automobile Manufacturers' Association.

Latvian government prepares legislation to protect rights of Latvian in Britain after Brexit

Latvian government has started working on a document that provides for the protection of rights of Latvian citizens working in Britain and vice versa after Brexit, says Latvian Foreign Affairs Minister Edgars Rinkēvičs.

Karolis Sankovski appointed as chairman of RB Rail council

A new council chairman has been appointed in Baltic joint company RB Rail. Riia Sillave and Edvīns Bērziņš were picked as vice-chairmen, as the company reports.

airBaltic carried record number of passengers in 2018 – 4.1 million

Latvian airBaltic airline carried a total of 4,136,711 passengers to different destinations in 2018. This is 17% more when compared to 2017. The number of passengers carried in 2018 is airBaltic’s all-time highest, as BNN was told by the company.

KPV LV to decide on dismissing Kaimiņš as vice-chairman of party’s faction

KPV LV party’s Saeima faction plans to discuss the proposal of dismissing Artuss Kaimiņš from the post of the faction’s vice-chairman.

Latvian minister sceptical about abolishing MPC system without litigations

Latvia’s Economy Minister Arvils Ašeradens does not expect abolishment of the mandatory procurement component system this year to pass without litigations.

Latvian parties agree on 90% of content of coalition cooperation agreement

Parties of the forming coalition move towards a cooperation model in which matters are resolved based on the principle of consensus, says prime minister candidate Krišjānis Kariņš from New Unity.

What do Britons actually want? Reactions from EU politicians

Commenting on the rejected deal of UK withdrawal, leaders of the European Union and member states, which are British neighbours, are seeking clarity over the exit scenario London would prefer if the British really want to leave.

Ministry fails to coordinate decision regarding Riga City Council’s dismissal

On Tuesday, 15 January, Latvia’s Environment Protection and Regional Development Ministry failed to coordinate the latest redaction of the decision project On the Dismissal of Riga City Council, because the Latvian Association of Local and Regional Governments and Latvian Association of Large Cities objected it.

UK rejects Brexit deal, May faces no-confidence vote

British Prime Minister Theresea May hopes to overcome a vote of no confidence in her government, following the rejection of her Brexit deal in the UK Parliament.

Is polygamy the answer for Latvia? «Demographic affairs expert» Parādnieks is the man for the job!

The government formation process in Latvia is progressing slowly and painfully. It is as though a ship without navigation – Latvia has yet to find its way in the ocean of political roads. And this ocean I full of «icebergs» Latvia keeps bumping against. The latest one is National Alliance’s official candidate, an «expert» at resolving demographic problems Imants Parādnieks.

Latvian government approves unified requirements for road and street construction quality

On Tuesday, 15 January, Latvian government approved a project of rules from the Cabinet of Ministers. The goal of this project is ensuring rational use of public funds for road and street construction.

Strike in German airports cancels hundreds of flights

Several hundred flights have been cancelled in German airports on January 15, because of strike as part of an airport worker wage dispute. Germany's powerful Verdi union has announced the strike would last from 02:00 am until 8:00 pm local time at the airports of Frankfurt, Munich, Hanover, Bremen, Hamburg, Leipzig, Dresden and Erfurt.