Czechs stay out of Euro mix

Debt crisis scares Czechs away from adopting euro

Czech financial officials say they do not recommend setting a date for the country to adopt the troubled euro currency because of potential costs associated with the debt crisis.

The finance ministry and central bank say the Czech Republic would face extra costs if it were to join the euro because it would have to contribute to the eurozone's bailout fund

In a joint statement released Thursday, the two institutions also said the country still has not met necessary financial criteria, including a low deficit, to join the euro.

The Czechs say it will be "vital" to monitor how the eurozone deals with its financial problems.

All non-euro countries in the EU, except Britain and Denmark, are officially committed to join the euro, though in practice they can defer that decision indefinitely."

Comment: Smart Czecks!

How does the Euro work?

How the euro became a broken dream

Excerpt:

Creating a currency which could be used across such disparate economies was always a difficult task. The idea for a single currency was promoted by Jacques Delors, a former French minister of finance, who held the European Commission presidency from 1985 to 1995.

The aim was to stamp a European identity in the markets, bringing, among other things, price stability, growth and trading benefits. The Delors report of 1989 defined a monetary union objective as being, in part, a "complete liberalization of capital movements."

...

The Greek economy has been in trouble since the country joined the euro, due to a mix of overspending and inability to raise enough revenue. In 2004, it admitted that the country's financial position was worse than reported and had breached the eurozone entry requirements.

By 2008 the government had narrowly passed a belt-tightening budget, designed to trim its massive national debt burden, triggering massive protests. In 2009, Greece admitted its deficit would be more than 12% of gross domestic product -- far higher than previous estimates and more than four times the requirements of entry into the eurozone.

The country was hit with ratings downgrades, pushing its sovereign bonds into so-called "junk" territory, and the damage continued to spiral. Despite the introduction of brutal austerity measures -- which have prompted waves of violent protests -- Greece has been unable to balance its books. There is a risk it could be forced out of the eurozone.

Comment: Good article on the history of the Euro and the Greek problem

Euro - Dollar chart

EUR/USD (EURUSD=X)


Comment: Back in 2002 the Dollar and Euro were 1 to 1

Greece and Euro in Crisis

Euro in danger as the Greek crisis deepens and Merkel admits currency is at risk

Excerpts:

The head of Germany’s leading debt management agency warned the euro would collapse if any member defaulted on its debt.

...

Yesterday [Greece] faced riots as workers revolted over the government's austerity plan as it tries to bring its debt under control.

Comment: The ugly result of national debt

GMU will be to the Arabs what the &euro is to Europe

Kuwait Backs Talks on Creating Gulf Monetary Union

Excerpt:

The Kuwaiti Parliament unanimously approved Tuesday a measure to join efforts to create a Gulf monetary union, but a top government official said adoption of a single currency could take as much as a decade

Kuwait is the latest member of the six-nation Gulf Cooperation Council to approve the project. Issuing a Gulf currency would “take a long time and could reach up to 10 years,” Sheik Mohammad al-Salem al-Sabah, the Kuwaiti foreign minister, told Parliament.

Kuwaiti lawmakers delayed the vote last month, saying they needed more time to assess the economic implications of a union.

On Tuesday, lawmakers called for another vote to take place before any possible introduction of a single currency.

Among other members of the council, Saudi Arabia has approved the plan and Bahrain is on track to ratify the project before a meeting of Gulf rulers in Kuwait next week.

Abdulrahman al-Attiyah, the council’s secretary general, has said that a third council member, Qatar, had already ratified the union plan although Qatari officials have declined to comment. Two other members of the council, the United Arab Emirates and Oman, have chosen not to join the monetary union plan.

Discussions on creating a single Gulf currency have gained momentum as the value of the dollar has declined.

Comment: &euro = Euro