Euro Gains Popularity in Central Europe | Europe | News and current affairs from around the continent | DW | 29.04.2005

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Euro Gains Popularity in Central Europe

It may be up to five years until they plan to formally adopt the euro, but many central European countries are already using the currency for an increasing number of transactions.

The euro is supplanting the koruna, forint and zloty

The euro is supplanting the koruna, forint and zloty

At cashiers in many large stores there are signs that euros are accepted and stating the daily exchange rate -- while business transactions are increasingly being done in euros. On January 1 last year, Slovakia introduced a new law allowing shops and restaurants to freely accept euros, four months before the country joined the European Union.

"Until then establishments had to have special permission but more and more wanted to be able to accept payments in euros," Slovak Central Bank spokesman Igor Barat told the AFP news agency.

Tourists make up the bulk of the euro payments, but numerous Slovaks returning from holidays in the euro zone use up their money this way.

"Last year we saw an increase of several percent in the number of payments made in euros which is down to the increase in tourists," Petr Vyhnalek, a director of retail chain Globus in the Czech Republic, said. "We have seen a significant number of payments in euros in Prague by tourists and also in border regions by Poles and Germans," Vyhnalek added.

Countdown to the euro

Euroscheine in Geldschublade

In Slovenia, as the countdown begins to the euro's expected adoption in 2007, the government plans to introduce dual-pricing in all stores later this year. Prices are already increasingly being advertised both in Slovenian tolars and euros, particularly for real estate and cars.

The euro has become popular in Poland's border regions, particularly along the frontier with Germany but also with Ukraine and Lithuania.

"The euro has superseded the traditional dollar there," Stanislaw Kluza, an economist with BGZ bank, said.

Around 30 percent of domestic and export business transactions by larger Czech companies are now carried out in euros, says Czech Economic Chamber President Jaromir Drabek.

"Czech companies are increasingly using euros because of the currency's stability compared to the fluctuating koruna exchange rate, and that proportion is set to grow," Drabek told AFP.

The trend is particularly strong in the automotive and chemical industries. The Czechs plan to adopt the euro in 2010. Some Slovak banks already state the euro's rate equivalent on their clients' koruna account statements.

"This is getting Slovaks used to the euro ahead of its adoption in 2009," said Barat.

Euro loans on the rise

EU Erweiterung Ungarn Parlament in Budapest

An outside view of the Hungarian Parliament Building in Budapest.

Many companies in the region have taken out loans in euros due to better interest rates. In Hungary euro-denominated retail and household loans are dramatically on the rise. Seventy percent of new corporate loans last year were in a foreign currency, predominantly euros, according to the Hungarian Financial Supervisory Authority.

"The most important reasons ... are companies' confidence in the stability of the forint exchange rate and the difference between the relatively high interest rate on forint loans and the relatively low interest rate on foreign currency denominated loans," it said in a recent report.

In 2004, 44.5 percent of all corporate loans were foreign currency denominated (mostly euros), up from 35 percent in 2002, while 14.5 percent of household loans were foreign currency denominated, up from 2.9 percent in 2002, the authority said.

In Slovakia train and plane tickets abroad, taxi fares and restaurant and hotel bills can all be paid in euros. A Slovenian public opinion poll rated the euro the most trusted "institution".

Tourist-orientated companies in Slovenia can legally accept euros. Shops near the Italian or Austrian border and petrol stations and motorway toll stations countrywide also accept euros.

In Lithuania the law already allows payments in euros and some retailers post prices in euros. In Estonia, even though accepting euros is illegal, shops display prices both in kroons and euros, to ensure a smooth transition to the euro, which Estonia plans to adopt in 2007, and customers get receipts in both currencies.

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  • Date 29.04.2005
  • Author AFP (mry)
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