Tag Archives: Euro

Greek debt dilemma


In Germany a half of citizens are against offering debt relief to Greece and around three in 10 prefer Greeks to leave the euro zone, a survey showed on Friday.

The INSA poll for the newspaper Bild showed 46.4 percent of people living in Germany, Europe’s paymaster, thought giving Greece debt relief would be unfair for other euro zone countries.

That compared with around one fifth (18.4 percent) who did not share that view and 9.1 percent who said they did not care.

Athens and its creditors – euro zone member states and the International Monetary Fund – agreed on this week to resume talks on a long-stalled review of Greece’s bailout, but only after Greece accepted examination of its reforms for 2019 onwards.

Russian ruble devaluation #russia #ruble #euro #currency


While the President of the Donetsk People’s Republic, Alexander Zakharchenko, announced yesterday that he wanted to adopt the Russian ruble as national currency (in order to exchange with Russia and hoping to stabilize the economy), the exchange rate of the ruble doesn’t stop sinking.

However, the Russian ruble has been used for 700 years in a lot of different countries (nowadays we can name Byelorussia and the Abkhazia). Since then, why does it suffer from such a devaluation?

In August 2014, 1 euro represented 48,65 Russian rubles, and 1 dollar,  37,09 rubles.
Currently, 1 euro amounts to 68,71 rubles and 1 dollar 60,71 (26/02.2015). This collapse falls to the “Ruble crises”, that begins in July 2014 and reaches its height in December of the same year (the 16th of December, 1 euro equaled 84,90 rubles and one dollar, 67,91 rubles).

Some reasons might explain this : the drop of oil prices (oil represents 2/3 of Russian exportations and half of its revenues), speculations against ruble and the economic sanctions imposed by the USA and the European Union.

This crises leads to concrete repercussions on the Russian daily life : an important capital flight and increasing of the prices by 10%. People invest and buy furnitures, cars and electrical appliances.

Anastasiya Tretyak

La Lituanie entre dans la zone ‚ā¨ au 01.01.2015



Le 17 avril 2014, le Parlement lituanien a adopte une loi pr√©voyant l‚Äôadh√©sion √† l‚Äôeuro le 1er janvier 2015. Le 4 juin, la Commission europ√©enne et la Banque centrale europ√©enne donn√®rent leur accord pour que le pays devienne ainsi le 19e¬†membre de la zone euro3. En effet, l’ex√©cutif europ√©en consid√®re que la Lituanie ¬ę¬†remplit maintenant tous les crit√®res de convergence¬†¬Ľ. Le 16 juillet, leParlement europ√©en donna son feu vert.Le 23 juillet 2014, le Conseil europ√©en ent√©rina d√©finitivement l’adh√©sion √† la zone euro au 1er janvier 2015


Les pi√®ces en euro lituaniennes poss√©deront toutes les huit le m√™me motif sur le c√īt√© face. Les diff√©rences entre les pi√®ces sont que celles de un et deux euros poss√®dent des lignes verticales sur le cercle ext√©rieur, les pi√®ces de cinquante, vingt et dix centimes poss√®dent des lignes horizontales sur le cercle ext√©rieur, et les pi√®ces de un, deux et cinq centimes ne poss√®dent pas de lignes sur le cercle ext√©rieur. Le dessin repr√©sentera les armoiries de la Lituanie, Vytis, entour√© de douze √©toiles dor√©es, et il a √©t√© annonc√© le 11 novembre 2004 que le mot LIETUVA figurera √©galement sur les pi√®ces. Les dessins des pi√®ces ont √©t√© pens√©s et cr√©√©s par le sculpteur Antanas ŇĹukauskas. En 2014, il est annonc√© que l’institut d’√©mission lituanien mettrait la date de 2015 (date pr√©vue d’√©mission) sur toutes les pi√®ces. ¬†Le motif pr√©sent sur la bordure de la pi√®ce de 2¬†euros n‚Äôest pas encore connu.


The SEPA is the single euro payment area.

The Commission has adopted a proposal to give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted so as to minimise any possible risk of disruption to payments for consumers and businesses. The proposal does not change the formal deadline for migration of 1 February 2014.

Internal Market and Services Commissioner Michel Barnier said:¬†“An efficient Single Market needs an efficient SEPA. The entire payments chain – consumers, banks, and businesses – will benefit from SEPA and its cheaper and faster payments. Cross-border payments are no longer exceptional events which is why an efficient cross-border regime is needed.

As of today, migration rates for credit transfers and direct debits are not high enough to ensure a smooth transition to SEPA despite the important work already carried out by all involved.

Therefore, I am proposing an additional transition period of 6 months for those payment services users who are yet to migrate. In practice this means the deadline for migration remains 1 February 2014 but payments that differ from a SEPA format could continue to be accepted until 1 August 2014.

I regret having to do this but it is a measure of prudence to counter the possible risk of disruption to payments and potential consequences for individual consumers and SMEs in particular.

There has been evidence in the past few months and I have warned many times that migration was happening too slowly and call once more on Member States to fully assume their responsibilities and accelerate and intensify efforts to migrate to SEPA so that all can enjoy its benefits, that is, faster and cheaper payments across Europe. The transition period will not be extended after 1 August.”

The Single Euro Payments Area (SEPA) is where more than 500 million citizens, over 20 million businesses and European public authorities can make and receive payments in euro under the same basic conditions, rights and obligations, regardless of their location.

The SEPA Regulation (EC 260/2012) adopted in 2012, aims to create the reality of a European Single Market for retail payments. The SEPA Regulation marks 1 February 2014 as the point at which all credit transfers and direct debits in euro should be made under the same format: SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD).

The Commission and the Eurosystem have been monitoring progress of all stakeholders: banks, payment institutions, national and local administrations, corporates (including small and medium-sized businesses), and consumers. Although migration rates have been growing over the last few months to reach 64.1% for SCT and 26% for SDD in November, it is now highly unlikely that the target of 100% for SCT and SDD can be reached by 1 February 2014.

If no action were to be taken by the Commission and the co-legislators, banks and payment services providers would be required to stop processing payments that differ from the SEPA format as of 1 February 2014. This could result in serious difficulties for market participants that are not yet ready, particularly SMEs, who could have their payments (incoming or outgoing) blocked.

That is why the Commission is making a proposal today to amend the SEPA Regulation and minimise the risk of possible disruption. The introduction of a transitional period of six months, until 1 August 2014, means that the SEPA end-date remains the same but banks and payment institutions will be able to agree with their clients to process payments that differ from the SEPA standard until then. After 1 August 2014, there will be no further transitional period.

Taking into account the urgency of the situation, the Commission urges the co-legislators to rapidly take up and agree this proposal so as to ensure legal clarity for all stakeholders. The Commission also calls upon Member States to ensure that, should the proposal still be in process of adoption on 1 February 2014, banks and payment services providers will not be penalised for continuing to process legacy payments in parallel with SEPA payments. For this reason, the proposal, if adopted after 1 February 2014 by the Council and Parliament will have a retroactive effect as from 31 January 2014.

Participants of the SEPA High Level meeting which brings together high-level representatives from the European Central Bank and board members of the Eurosystem central banks were consulted on this initiative on 19 December 2013.


Yesterday, the European Commission published its 2013 Convergence Report on Latvia, together with a citizen’s summary that briefly explains the report and the rationale behind it. The Commission concludes that¬†Latvia has achieved a high degree¬†of sustainable economic convergence with the euro area and¬†proposes that the Council decide on Latvia‚Äôs adoption of the euro as from 1 January 2014.


Olli Rehn, Commission Vice-President responsible for Economic and Monetary Affairs and the Euro said, ‚ÄúLatvia‚Äôs experience shows that a country can successfully overcome macroeconomic imbalances, however severe, and emerge stronger.¬†Following the deep recession of 2008-9, Latvia took decisive policy action, supported by the EU-IMF-led¬†financial assistance programme, which improved the flexibility and adjustment capacity of the economy within the overall EU framework for sustainable and balanced growth. And this paid off: Latvia is forecast to¬†be the fastest-growing economy¬†in the EU this year.”

He added:¬†“Latvia’s desire to adopt the euro is a sign of confidence in our common currency and further evidence that those who predicted the disintegration of the euro area were wrong.‚ÄĚ

The Convergence Report concludes a positive assessment of Latvia’s economic performance against the convergence criteria set out in the EU Treaty as follows:


The average inflation rate in Latvia in the 12 months to April 2013 was 1.3%, well below the reference value of 2.7%, and it is likely to remain below the reference value in the period ahead. While short-term factors (notably the VAT cut last July) have contributed to the particularly low current level of inflation, the analysis of underlying fundamentals and the fact that the reference value has been met by a wide margin support a positive assessment of the fulfilment of the price stability criterion. Latvia will need to remain vigilant to keep inflation at a low level, including by maintaining a prudent fiscal policy and keeping domestic demand on a sustainable path.

Public finances (deficit and debt)

The general government deficit-to-GDP ratio reached 8.1% in 2010, but decreased to 1.2% in 2012 and is projected to remain at 1.2% in 2013 according to the Commission’s latest Spring Forecast. The general government debt stood at 40.7% of GDP at end-2012. The Commission considers that the excessive deficit has been corrected in a credible and sustainable way and has recommended that the EU Economic and Financial Affairs Council (ECOFIN) close the excessive deficit procedure for Latvia (see¬†MEMO/13/463). If this is done, Latvia will fulfil the criterion on the government budgetary situation.

Interest rates

Latvia’s average long-term interest rate over the year to April 2013 was 3.8%, below the reference value of 5.5%. The spreads vis-à-vis euro area long-term benchmark bonds have been declining markedly since 2010, which reflects market confidence in Latvia.

Exchange rate

The Latvian lats has participated in the Exchange Rate Mechanism (ERM II) since 2 May 2005, which is considerably more than the minimum two years. When it joined ERM II, the Latvian authorities committed to keep the lats within a ¬Ī1% fluctuation margin around the central rate. During the two years preceding this assessment, the lats exchange rate did not deviate from its central rate by more than ¬Ī1% and it did not experience tensions.

Other factors have also been examined, including balance of payments developments and integration of labour, product and financial markets. Latvia’s external balance adjusted significantly during the crisis, supported also by improvements in its external competitiveness. Latvia’s economy is well integrated within the EU economy through trade and labour market linkages, and it attracts sizeable levels of foreign direct investment. The integration of the domestic financial sector into the EU financial system is substantial, mainly due to a high level of foreign ownership of the banking system.

Finally, Latvia’s¬†legislation¬†in the monetary field is compatible with EU legislation.

This assessment is completed by the European Central Bank’s (ECB) own convergence report, also published today.


Throughout the crisis, Latvia has successfully managed a difficult macro-economic adjustment process. Determined implementation of the EU-IMF-led financial assistance programme helped the country to steer out of a deep recession and to return to economic growth.

According to the EU Treaty, the Commission and the ECB report every two years or upon request by a Member State with a derogation on the subject. On 5 March this year, Latvia formally asked the Commission to deliver an extraordinary convergence report with the aim of joining the euro from 1 January 2014.

The conditions for euro adoption consist of four stability-oriented economic criteria regarding the government budgetary position, price stability, exchange rate stability and convergence of long-term interest rates which need to be fulfilled in a sustainable manner. National legislation on monetary affairs must also be in line with the EU Treaty.

According to the Treaty, additional factors also have to be taken into account in the assessment (balance of payments, market integration) as indicators that the integration of a Member State into the euro area will go ahead without problems and to broaden the view on the sustainability of convergence.

ECOFIN Council will take the final decision on the adoption of the euro in Latvia in July, after the European Parliament has given its opinion, euro area Finance Ministers have given a recommendation and EU leaders have discussed the subject at the European Council meeting on 27-28 June.

The procedure will be fully completed once the Council of Ministers, acting by unanimity of its euro area Member States and Latvia, has irrevocably fixed the exchange rate of the lats to the euro.



The european commissionner ¬†Androulla Vassiliou today announced letland will join the Eurozone in just about 6 mothns on january 1st 2014. It will be the 18th country to join the ‚ā¨.


European Commissionner Olli Rehn

The european commissionner  Olli Rehn who deals with Euro-enlargment said that LATVIA is an exemplary country.

So 6 months to wait for the Latvians and they’ll join the great Euro-familly !


The Commission has suggested four possible scenarios for the future issuance or withdrawal of 1 and 2 euro cent coins. The Communication adopted today responds to a request from the European Parliament and the Council of Ministers in 2012 to investigate the use of the 1 and 2 euro cent coins against the criteria of costs and public acceptability.  The conclusions of the exercise largely focussed on the cost-benefits of producing and issuing the coins and the attitude of the general public towards the coins.


‚ÄúThe Commission has consulted business and consumer associations, treasuries, mints and central banks on the pros and cons of¬†continued issuance of the 1 and 2 cent coins‚ÄĚ said¬†Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro. ‚ÄúWe will now take forward this discussion with stakeholders and Member States and see whether a clear preference emerges on which to base a legislative proposal.‚ÄĚ

The Commission has structured its analysis around four possible scenarios:

  • Status quo:¬†1 and 2 cent coins continue to be issued under today‚Äôs conditions, without changing the legal or material context. They remain legal tender and continue to be produced with the current technical specifications (such as metal, weight and size) and without changing the production and issuance processes.
  • Issuance at reduced costs:¬†The coins continue to be issued but issuance costs are reduced through changing the material composition of the coins or by increasing the efficiency of the coin production, or both. This would address the problem confronting most euro area Member States facing losses as a result of issuance costs far exceeding the face value of the coins.
  • Quick withdrawal:¬†Under this scenario, the issuance of these denominations ceases and the coins in circulation are withdrawn, mainly through retailers and banks within a pre-established short time period. Binding rounding rules would apply as of the first day of the withdrawal period and the coins would cease to be legal tender at the end of the withdrawal exercise.
  • Fading out:¬†This¬†scenario has the effect of a withdrawal, but achieves it in a different way. While the issuance of coins would cease and binding rounding rules apply also under this scenario, the coins would remain legal tender. They could still be used, but only for payment of the rounded final sum. Since no new coins would be issued, they would be expected to disappear gradually from circulation due to their high loss rate and lack of attractiveness as convenient payment means.

A number of key conclusions can be drawn from the stakeholder consultation and the analysis:

  • The production of 1 and 2 cent coins is clearly a loss-making activity for the euro area with the difference between the face value of the coins and the price paid by the state to get them pointing at an estimated total cumulative loss of ‚ā¨1.4 billion since 2002.
  • The attitude of the general public is rather mixed: while people are attached to these small denominations and fear the risk of inflation if they were to disappear, they handle these coins as non-value items and do not re-circulate them in payment channels. The resulting high loss rate combined with the existence of psychological prices leads to an ever-growing demand for issuance of new small coins, which today represent nearly half of the coins in circulation.
  • While the economics of issuing 1 and 2 euro cent coins would plead for discontinuing issuance, cost elements need to be balanced against other considerations, notably the negative reaction from the general public that rounding rules could trigger.

Next steps

Further discussions with all the relevant stakeholders are needed on the basis of the four scenarios described. Should a clear preference emerge, the Commission will come forward with the necessary legislative proposals.


Euro coins are issued by Member States but the Council is competent for harmonising their denominations and technical specifications. Denominations and technical specifications of euro coins intended for circulation are laid down in Council Regulation (EC) No 975/98. In accordance with that Council Regulation, only coins denominated in euro and cent and complying with the denominations and technical specifications laid down by the Council have the status of legal tender in all Member States whose currency is the euro. Any change in the existing euro coin denomination structure (e.g. abolishing the 1 and 2 euro cent coins) would require a change of the relevant Council regulation.

Since January 2002, euro area Member States have issued more than 45.8 billion 1 and 2 euro cent coins, the equivalent of 137 coins per capita.