Experience with euro changeover preparations in Estonia

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Experience with euro changeover preparations in
Estonia

• Anne Sulling
• Former euro project manager in Estonia

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General considerations

• Practical preparations
• Take minimum 2 years for a small country
• Nominal convergence
• May not happen at the right time

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Set a target date or leave it open?

• A target date is useful for policy-planning and
  timing of preparations
• Set a target date only if it is credible
• Do not set a target date if uncertain use -day
  as a benchmark in the national changeover plan
  and other materials

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Inflation forecast which is a likely target
date?
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Considerations for nominal convergence

• Focus on macroeconomic policy planning
• Excise tax increases ahead? ? raise them now!
• Budget balance ? maintain a conservative fiscal
  stance
• Monetary policy measures (not possible under
  currency boards)
• Optional tricks to manage inflation temporary
  wage freezes, managing administered prices,
  agreements with entrepreneurs not to increase
  prices, etc.

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Main areas for practical preparations

• National changeover plan
• Legislation
• Communications
• IT systems

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Putting together a national changeover plan

• Set up a coordination unit
• National changeover committee
• Euro project manager
• Set up relevant working groups
• Central Bank and credit institutions
• Legal issues
• Business sector
• Public sector
• Consumer protection
• Communications

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What kind of changes to legislation?

• The Constitution ?
• Central Bank law
• Umbrella law
• Laws that require thorough treatment (i.e. The
  Commercial Code)
• Government regulations
• Ministries regulations
• A regulation on the dual display of prices

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Communications

• Prince programme
• Euro communication strategy and action plan
• Partnership between the member state and the
  European Commission
• Communication action plan set up by target groups
  (general public, enterprises, local governments,
  pensioners, children, disabled, media)

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What can be prepared in times of uncertainty?

• Practical preparations that are time insensitive
• Set up a changeover board and working groups
• Draw up a euro changeover plan
• Logistical plan for the cash changeover
• Legal framework for the euro changeover
• Information materials that are time insensitive
• Analysis and mapping of changes that need to be
  undertaken with regard to euro changeover
• IT developments that are not time sensitive
• Time-sensitive preparations ? leave for after the
  Councils decision (at least 6 months prior to
  changeover)
• Investments that may become outdated if accession
  is postponed
• Time sensitive information materials
• Minting of coins

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What should the private sector do?

• Entrepreneurs should be informed of the
  changeover likelyhood
• Banks and enterprises with larger IT systems
  should start with changeover preparations at
  least 2 years ahead of the likely target date.
• Before changeover certitude, entrepreneurs should
  focus on the time insensitive practical
  preparations
• Analysis and mapping of changes that need to be
  undertaken with regard to euro changeover
• IT developments that are not time sensitive
• Leave time-sensitive preparations for after the
  Councils decision
• Investments that may become outdated if accession
  is postponed

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Main lessons from the Estonian experience

• Start changeover preparations at least 2 years
  prior to the changeover target date, encourage
  the private sector to do so as well
• Undertake first the time insensitive
  preparations, leave the time sensitive ones for
  after the Councils decision
• Do not underestimate macroeconomic policy
  planning to aid nominal convergence
• Communication, communication, communication!
• Inform the public of the macroeconomics of the
  situation
• Provide timely and adequate information to the
  private sector about changeover probabilities ?
  entrepreneurs will manage their own risks
• Leave at least 6-months between the accession
  decision and accession date to complete the time
  sensitive preparations

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