On 1 January 2007 Slovenia became of the first of the EU’s most recent members – the 12 countries which joined the EU in 2004 and 2007 – to adopt the euro as its currency. It thus became the 13th member of the euro area. The meticulous planning for the changeover paid off as the transition went swiftly and smoothly.
In the space of less than two decades, Slovenia has undergone a remarkable transformation from a socialist planned economy to integration into the EU and the euro area. Formerly one of Yugoslavia’s consituent republics and only independent since 1991, Slovenia is the only one of the ex-Yugloslav countries to have become a member of the EU and was the first of all the EU’s new member states to join the euro. Having met the Maastricht convergence criteria in a short period of time, Slovenia was given the go-ahead to adopt the euro after only two years as an EU member. The two million Slovenes brought the euro area’s total population to 317 million.
Legal steps to the euro
Less than two months after joining the EU, on 28 June 2004 Slovenia entered the ERM II exchange rate mechanism, the first step towards joining the single currency.
On 16 May 2006 the European Commission and European Central Bank released ‘convergence reports’ assessing Slovenia’s readiness to join the euro area by measuring it against the convergence criteria (Maastricht criteria) that all countries wishing to adopt the euro must fulfil. On the basis of those reports, on 11 July 2006 the ministers of finance of the EU, meeting in the ECOFIN Council, adopted a decision allowing Slovenia to join the euro area from 1 January 2007. It also fixed the conversion rate for the changeover from the old currency at 239.640 Slovenian tolars to the euro.
The government and Bank of Slovenia drew up a changeover plan in January 2005. It laid down all essential procedures associated with the introduction of the euro and was updated several times as the date of the changeover approached.
Prices of goods and services had to be displayed in both tolars and euros from 1 March 2006, so that people could get used to the prices in euros; this was partly intended to avoid unjustified price rises around the changeover date itself. Compulsory dual pricing continued until the end of June 2007, six months after the changeover.
Slovenia chose a ‘big bang’ scenario for its changeover, with cash entering use on the same day that the euro officially became the country’s new currency – 1 January 2007 – in contrast to the 3-year transition period which accompanied the birth of the euro in 1999-2002. Nevertheless Slovenia still had a short period of dual currency circulation, from 1 to 14 January 2007, during which people could still make payments using tolar banknotes and coins as well as the euro.
Slovenians could change their cash at retail banks free of charge until 1 March 2007, while the Bank of Slovenia still changes tolar banknotes without any charge, and will continue to do so indefinitely, while it will cease to exchange tolar coins at the end of 2016. From 12 March 2007 onwards, tolars can also be exchanged at the branches of Nova kreditna banka Maribor and Deželna banka Slovenije, which have been selected by public tender.
All money on deposit, including money in transaction accounts, was automatically converted into euros on 1 January 2007.
An information campaign to accompany the run-up to the adoption of the euro started in 2006 under the slogan 'The euro, for all of us' ('Evro-za vse nas'). The objective was to ensure that all Slovenians knew everything they needed to about the new currency and EMU before it became a reality for them.
The European Commission gave Slovenia financial and practical support for the campaign under a Partnership Agreement signed in November 2005. The campaign included printed information material and a media campaign including TV and radio clips, and advertisements in print media, the cinema and the internet, of which some examples can be viewed here:
How did the changeover go?
An in-depth study of the currency changeover published by the European Commission in May 2007 found that it was a swift and smooth affair, and that the significant price rises feared by consumers had not materialised. While some unusual prices rises were recorded in restaurants, cafés and the like the overall impact on prices was marginal, as it had been in the first-wave changeover in 2002. Eurostat estimated the impact of the changeover on Slovenia’s consumer price inflation at around 0.3 percentage points, while Slovenia’s own Institute for Macroeconomic Analysis and Development put the figure at 0.24 percentage points.
What is more, the annual inflation rate (HICP) actually fell in January 2007, to 2.8% from 3% in December 2006, and dropped again, to 2.3%, in February 2007, suggesting that the impact of the changeover on some price rises, although noticeable, was too small to drive consumer price inflation.
Opinion polls confirmed the success. The vast majority of Slovenians polled at the end of January 2007 felt that the changeover had been smooth and efficient (95%) and were happy with the level of information they had received (92%). Fewer, however, (56%) felt that price conversions had been fair, and those who considered the rounding off of the new prices to have been fair were actually in a minority of only 38%. The Commission published a new poll in May 2007 which confirms the results registered at the beginning of the year.
Slovenia was the first EU country to experience the 'big bang' scenario and it did it very satisfactorily, also confirming the technical feasibility of a short dual circulation period (2 weeks), which benefits retailers and business by reducing the burden of handling two different currencies.
Eurobarometer on the introduction of the euro in Slovenia