Why fiscally prudent Estonia wants to join the troubled euro
Charlemagne, The Economist [December 29, 2010]
IT TAKES only a brief visit to the Bank of Estonia’s small basement museum to grasp what turbulent decades the Baltic states have endured. This corner of Europe’s “bloodlands” between Russia and Germany saw a bewildering succession of currencies: roubles (tsarist and Soviet), marks (imperial and Nazi) and, among these, a cherished era of Estonian money, from 1919 to 1940. After the break-up of the Soviet Union, the kroon was restored in 1992, a symbol of independence regained.
Now the kroon, too, is destined to become a museum piece, though this time its abolition is voluntary. On January 1st Estonia adopts the euro, with mixed emotions among the numismatists in the museum shop. Most Estonians accept the government’s view that giving up the kroon will strengthen Estonia economically and politically. Pegged from the outset to the D-mark and then the euro, the kroon has hardly been independent. Abandoning it, say ministers, will end speculation about devaluation, reduce transaction costs, lower interest rates and boost investment.
To many Estonians, the euro also means security.
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