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sabenapilot
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Joined: Sat Feb 26, 2000 6:18 pm

Croatia and Bulgaria to join the Euro currency

Fri Jul 10, 2020 8:03 pm

Croatia and Bulgaria will enter the Exchange Rate Mechanism, known as ERM-2, according to a joint statement from the European Central Bank and the European Council on Friday.

European Commission Vice-President Valdis Dombrovskis said: “It’s a testament to the attractiveness of our common currency -- still relatively young but highly successful globally.”

Over the coming months, the ECB will establish close cooperation with the 2 countries’ central banks, taking over direct supervision of their biggest lenders as from October.

The European Central Bank has also set base echange rates for the 2 currencies this evening: 7.5345 per euro for the kuna and 1.95583 per euro for the lev

Croatia and Bulgaria are to become the 20th and 21st countries to adopt the currency in just over 2 years from now.

https://www.ecb.europa.eu/home/html/index.en.html
 
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Dutchy
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Re: Croatia and Bulgaria to join the Euro currency

Fri Jul 10, 2020 8:12 pm

They are moving ahead, good for them.
Many happy landings, greetings from The Netherlands!
 
Dieuwer
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Re: Croatia and Bulgaria to join the Euro currency

Sat Jul 11, 2020 8:25 am

I understand they want to join Schengen as well?
 
sabenapilot
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Re: Croatia and Bulgaria to join the Euro currency

Sat Jul 11, 2020 8:54 am

Ever since the new Euro note series, the word 'EURO' also appears on all bank notes in Cyrillic as 'EBRO', along with the Greek 'ΕYPO'.

Since Bulgaria -the only EU country using the Cyrillic alphabet- is not yet a member of the eurozone, this was to be seen as a political signal of the ECB’s trust in the future enlargement to the east of the European single currency area, something which is now a step closer indeed.

Two further EU and thus Euro zone candidate countries, Macedonia and Serbia, also use the Cyrillic alphabet.

https://www.euractiv.com/section/langua ... uro-notes/
 
Bostrom
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Re: Croatia and Bulgaria to join the Euro currency

Sat Jul 11, 2020 6:42 pm

Dieuwer wrote:
I understand they want to join Schengen as well?


Yes, and Croatia is probably very close to becoming a Schengen member, they were given a green light by the commission last year.
 
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einsteinboricua
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Re: Croatia and Bulgaria to join the Euro currency

Sat Jul 11, 2020 9:42 pm

I'm eager to see how they deal with Bulgaria. In essence, Bulgaria has already been in the ERM2 unofficially since the lev has been pegged at 1:1 to the Deutsche mark (which then got converted to 1.95-ish lev/euro)....I thought they would have given Bulgaria a fast-pass to the euro provided all other criteria was met. I'm actually surprised they took their time to approve Bulgaria's entry into ERM2 given that the Baltic sisters all had currency pegs (indirectly to the euro), as did Cyprus and Malta.
"You haven't seen a tree until you've seen its shadow from the sky."
 
sabenapilot
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Re: Croatia and Bulgaria to join the Euro currency

Mon Jul 13, 2020 11:22 am

einsteinboricua wrote:
I'm eager to see how they deal with Bulgaria. In essence, Bulgaria has already been in the ERM2 unofficially since the lev has been pegged at 1:1 to the Deutsche mark (which then got converted to 1.95-ish lev/euro)....I thought they would have given Bulgaria a fast-pass to the euro provided all other criteria was met. I'm actually surprised they took their time to approve Bulgaria's entry into ERM2 given that the Baltic sisters all had currency pegs (indirectly to the euro), as did Cyprus and Malta.


Pegging a currency unilaterally to the Deutsche Mark and upon its replacement in 2002 the Euro, does not give a country a headstart to join the European Single Currency.

A nation needs regulatory compliance as well as mutual acceptance for that, because the ECB needs to take control over the national bank and prop it up when things go south.

A unilateral currency peg is not supported by the ECB, only Single Currency membership is as was widely demonstrated when the ECB indeed lived up to its mandate under the EU treaty to do whatever it takes to demonstrate the Euro is irreversible and indivisible indeed.

In fact, the EU does not even like it when third countries unilaterally start to use the Euro as their nation's currency, either by pegging their own curency to it, or by simply replacing it completely by the euro, like for instance Montenegro did, because it could give rise to unfounded expectations which the EU's ECB is in no position to uphold.
 
tommy1808
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Re: Croatia and Bulgaria to join the Euro currency

Mon Jul 13, 2020 12:34 pm

sabenapilot wrote:
einsteinboricua wrote:
I'm eager to see how they deal with Bulgaria. In essence, Bulgaria has already been in the ERM2 unofficially since the lev has been pegged at 1:1 to the Deutsche mark (which then got converted to 1.95-ish lev/euro)....I thought they would have given Bulgaria a fast-pass to the euro provided all other criteria was met. I'm actually surprised they took their time to approve Bulgaria's entry into ERM2 given that the Baltic sisters all had currency pegs (indirectly to the euro), as did Cyprus and Malta.


Pegging a currency unilaterally to the Deutsche Mark and upon its replacement in 2002 the Euro, does not give a country a headstart to join the European Single Currency.

A nation needs regulatory compliance as well as mutual acceptance for that, because the ECB needs to take control over the national bank and prop it up when things go south.


Successfully pegging to another currency may help removing trust issues, but you are right, technically it makes no difference.

Aside of not having ERMII membership the inflation rate in Bulgaria is too high and compatibility of legislation isn't given yet. Croatia meets the inflation rate criteria, but debt to GDP ratio is too high, on top of legislation.

Best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
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einsteinboricua
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Re: Croatia and Bulgaria to join the Euro currency

Mon Jul 13, 2020 1:11 pm

sabenapilot wrote:
Pegging a currency unilaterally to the Deutsche Mark and upon its replacement in 2002 the Euro, does not give a country a headstart to join the European Single Currency.

Well, part of the purpose of ERM2 is to peg that country's currency to the euro and have it trade within certain margins. Yes, there's more that goes on with the mechanism (controlling inflation, debt levels, etc.), but if the country has been able to meet all or most of the criteria, except the formal 2 year period of ERM2, I would have thought that EU authorities would have allowed membership much sooner (not to the euro, which still requires final approval, but to the ERM2).
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