1. NÁRODNÁ BANKA SLOVENSKA Slovakia and the Euro: Mission Completed Ódor Lajos Member of the Bank Board

2. December 20082Budapest Outline Once Laggard, Now Leader Costs and Benefits Crisis and the Euro: Is it Better to be Inside? Main Lessons for Floaters Policy Advice

3. December 20083Budapest Once Laggard, Now Leader No one wanted to lag behind again in 2003 Successful structural reforms Good luck Political consensus enforced also by financial markets Consistent and realistic plans - no deviation from initial target date 2008/2009

4. December 20084Budapest Important Milestones

5. December 20085Budapest Policy Choices Credible fiscal consolidation – focus on the expenditure side Structural reforms have increased the growth potential nad flexibility of our economy Flexible inflation targeting regime with one eye on the exchange rate

6. December 20086Budapest Benefits Exceed Costs long-run GDP increase by 7-20 % * for comparability with permanent effects the one-off conversion costs are split to 5 annual installments

7. December 20087Budapest Euro Brings Stability  stable currency increases overall economic stability and creates favourable conditions for long-term business decisions Source: ECB Appreciation Depreciation

8. December 20088Budapest8 Main Lessons for Floaters Fulfillment of backward-looking indicators necessary but not sufficient Euro brought us many benefits even before the entry date ERMII and managed floating are friends, not foes Do not rely on equal treatment Qualitative assessment important; no definition of sustainability

9. December 20089Budapest9 Policy Advice (1) Political consensus is good for markets – vital for stable policy path (euro preparations take longer than one government office trem) Carry out structural reforms before eurozone entry Communicate, communicate, communicate Ask for sustainability assessment at ERM II entry Prepare your ERMII commitments very carefully Use maximum band in ERMII, do not fix

10. December 200810Budapest10 Policy Advice (2) Prepare escape clauses Be aware of speculative capital inflows in ERM II (one- way bets) Transparency in public accounts is a must Have a list of credible measures to support fiscal prudence Have a solid asessment of cyclical position, ER pass- through, labour market tensions and regulated prices

11. December 200811Budapest

12. December 200812Budapest Thank you for your attention! 2€1€ 50, 20, 10 c5, 2, 1 c