The ECOFIN Council took the final decisions on the euro adoption in Estonia and confirmed that Estonia is ready and will adopt the euro on 1 January 2011.
This decision culminates an approval process that began on 12 May with the adoption of the 2010 Convergence Report, in which the Commission concluded that Estonia fulfils all the necessary conditions to join the euro.
The Council, meeting in its configuration of finance ministers (ECOFIN Council), also set the conversion rate at 15.6466 Estonian kroonid to one euro, which corresponds to the current central rate of the kroon in the EU exchange mechanism (ERM II).
The procedure for a euro adoption by Estonia involved most of the European institutions - the European Commission, the European Parliament, the European Council, the ECB, the Eurogroup, and many committees preparing the procedure. Estonia is now set to change its krooni to the euro on 1 January 2011 and to become the 17th member of the euro area to switch to the common European currency.
Estonia will enter in a strong position, with public finances in good shape. Estonia recorded a budget deficit of 1.7% of GDP last year, well under the EU’s 3% limit. Government debt was also low– just 7.2% of GDP. The economy is highly flexible and, while not immune to the crisis, has shown its ability to operate and adjust under a fixed exchange rate for close to two decades.
Euro adoption is not the end of the road, however. As a euro area Member State building on on its solid track record, Estonia will be required to continue policies that support growth and contain the risk of excessive domestic demand.
The ECOFIN decision of 13 July gives Estonia time to complete the preparations for the euro changeover. The European Commission together with Estonian authorities and the European Central Bank work hand in hand in common projects such as euro exhibition, euro conference and information campaign to ensure a smooth changeover for Estonian residents.
An information campaign to accompany the run-up to the adoption of the euro has started under the slogan 'Welcome, euro' ('Tere euro'). Its objective is to ensure that all Estonians know everything they need about the euro as their new currency and Economic and Monetary Union (EMU) before it becomes a reality for them.
The Commission provides Estonia financial and practical support for the campaign under a Partnership Agreement. The campaign will include printed information material, TV and radio clips, as well as advertisements in print media, cinemas and on internet.
The euro was introduced on 1 January 1999 in 11 Member States as a virtual currency for cash-less payments and accounting purposes. Euro coins and banknotes were put in the circulation as from 1 January 2002 in 12 Member States. This was followed with the adoption of the euro by Slovenia in 2007, by Cyprus and Malta in 2008 and by Slovakia in 2009. Estonia will become in 2011 the 17th member of the euro area counting around 330 million people out of the EU's total of above 500 million.
In a ceremony in the Berlaymont building following the ECOFIN decision, Commissioner Rehn, the Estonian Finance Minister Jürgen Ligi, the ECB represented by Frank Moss, Director, and other guests assembled around a Euro map to add a euro button for Estonia.
From left to right:
Mr Jyrki Katainen, Finish Finance Minister
Mr Jürgen Ligi, Estonian Finance Minister
Mr Olli Rehn, Commissioner for Economic and Monetary Affairs
Mr Didier Reynders, Belgian Finance Minister and ECOFIN President
Mr Siim Kallas, Commissioner for Transport
Mr Franc Križanic, Slovenian Finance Minister
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