Steve Hanke whose proposals served as the basis for Estonia’s Lithuania and Bulgaria’s currency boards has stated that the three should not be in a rush to join the euro.
Currently the three counties’ currencies are pegged to the euro. The Estonian and Lithuanian central banks don’t decide on their own interest-rate. However, Hanke thinks that those countries should wait and see. “I don’t have any particular problem with adopting the euro in these currency board countries, but I don’t see any particular rush to do it either,” Hanke said to Bloomberg. “The narrow technical benefits they will receive will be very small, if any at all, and those can all be accommodated by just making the currency boards even more orthodox and tighter than they are.”
According to Hanke, the Estonian euro adoption would remove the “small” political risks of either the EU halting euro-zone expansion or the political preference for a speedy entry eroding in Estonia. It also means, however, that Estonia wouldn’t be able to “re- anchor the kroon to the dollar or the German mark, if it was re- established, in the event the euro would collapse, though it is a very small risk,” Hanke said to Bloomberg.
