Ten Years of the Euro Inspirations for the Czech Republic

1
Ten Years of the Euro Inspirations for the
Czech Republic

• György Szapáry
• Central European University,Budapest
• Conference hosted by Mr. Miroslav Kalousek,
  Minister of Finance of the Czech Republic,
  November 25, 2008

2
Nominal exchange rates against the euro2 January
14 November, 2008
3
Three-month interbank offered interest rates2
January 14 November, 2008
4
Current Account and CDS in new EU member states
5
Current Account and CDS in EU neighboring
countries
6
Current Account and CDS in old EU member states
7
Domestic credit ( of GDP)
7
8
Fast convergence in comparative price level as
well (EA12100)
8
9
Current account balance / GDP in the NMS
9
10
Fast convergence in GDP per capita at PPS
(EA12100)
10
11
Performance under the Maastricht criteria
12
Factors influencing the performance under the
Maastricht criteria in the years ahead

• Inflation the recession will reduce the
  inflationary pressures, but this can be offset by
  depreciations of the exchange rate.
• Interest rate the reduced capital inflows may
  make it difficult to satisfy the 10-year interest
  rate criterion.
• Budget deficit little room for counter-cyclical
  expansionary fiscal policy, so meeting the
  deficit criterion should not represent a big
  problem, unless bank bailouts occur.
• Government debt Hungarys debt is going to
  increase because of slow growth and borrowing
  under the IMF-EU-IBRD credit line.