1. Euro in Slovakia 1 st Year With the Common Currency And Its First Effects Igor Barát Member of the Board, Poštová banka, Bratislava Plenipotentiary of the Slovak Governement for the Introduction of the Euro (2007-2009) Katowice 2 June 2010

2. 1 January 2009: Slovaks with the new currency General atmosphere calm and positive High level of public awareness Enough cash ATMs, POS operational No technical or organisational limits Mandatory double pricing Dual circulation till 16 January Extended hours in banks for cash exchange Technically: Macro impact: Price increase by 0,12 – 0,19 % (NBS) 0,24% (MoF) Less than Malta, Cyprus, Slovenia (0,3 %) Unjustified jumps in prices not registered Some insignificant cases found in restaurants, hotels, cafés, services

3. 2 External Factors Dominated in Early 2009 Gas Crises in January – (dramatic drop in RU gas supply) - 80% of industry stopped or significantly limited production - Most of the economy in crises and emergency regime Outburst of the global financial and economic crises - Drop in foreign demand - Depreciation of CZK, PLN, HUF up to 30% to the Euro - „Shopping tourism“ of Slovaks - Decrease in passive tourism Difficult to abstract the immediate impact of the euro from other factors GDP -4,7%

4. 3 Maastricht Criteria Criterion March 2008ref. value 2008 (now) April 2010 inflation (average HICP, %)2,23,2 (0,9)0,3 interest rates (%)4,56,5 (6,2)4,5 public debt (% GDP)29,460,035,7 public deficit (% GDP)2,23,06,8 Exchange Rate Stability ERM II since Nov. 05 Source: Eurostat, European Commission, MF SR, NBS

5. 4 Inflation remains among the lowests

6. 5 GDP Growth

7. 6 Benefits of the Euro Adoption Direct (immediate) benefits Exchange rate stability/elimination of exchange rate risk lower costs of capital elimination of some transaction costs higher price transparency Higher comfort for people abroad Psychological aspects Indirect (long-term) benefits trade growth increase of FDI faster growth/increase of living standards/progress in real convergence

8. 7 The introduction of the euro is/was... Focus Agency, SK

9. 8 Slovakia Has The Best Rating In The Region Standard & Poor’s Moody’sFitch RatingJCRR&I Slovakia A+ stabilný výhľad A1 stabilný výhľad A+ stabilný výhľad A+ stabilný výhľad A stabilný výhľad Czech Republic A stabilný výhľad A1 stabilný výhľad A+ stabilný výhľad A stabilný výhľad A stabilný výhľad Poland A- stabilný výhľad A2 stabilný výhľad A- stabilný výhľad A- stabilný výhľad A- stabilný výhľad Hungary BBB- negatívny výhľad Baa1 negatívny výhľad BBB negatívny výhľad BBB+ stabilný výhľad BBB stabilný výhľad

10. 9 Medium-Term Outlook for Slovakia is more optimistic Source: Consensus Economics.

11. 10 Thanks for Your Kind Attention Igor Barát Member of the Board of Directors Poštová banka, a.s. Bratislava www.pabk.sk igor.barat@pabk.sk

12. 11 long-run GDP increase by 7-20 % Benefits vs. Costs

13. 12 Fiscal Deficit

14. 13 Fiscal Deficit

15. 14 ERM II Exchange Rate Development Nov 2005 ERM II entry 38,4550 SKK/EUR Mar 2007 1. revaluation 35,4424 -7,83% May 2008 2. revaluation 30,1260 -21,66% July 2008 conv. rate 30,1260

16. 15 Euro Cash Frontloading Banknotes 188 million ( 7 b. €) obtained thru ESCB/OeNB Vienna 51 million (950 mil €) subfrontloaded to banks Coins 499 million (150 mil. €) Minted in Kremnica Mint, Slovakia 283 million (98 mil €) subfrontloaded to banks Starter Kits for households and SMEs Set 45 coins worth 16,60 € (500 SKK) 1,32 mil produced and sold

17. 16 Information campaign In cooperation with professional agency: Creo/Young & Rubicam Information campaign for general public started in January 2008 Lasted till end February 2009 Partners: EC, ECB, OeNB, domestic institutions Domestic sources 6,2 m EUR European Commission 1,8 m EUR Total costs 7,9 m EUR 47% 31% 22%

18. 17 Euro myths and fears „Euro = „teuro“ = price jumps“ „Euro helps businesses, not ordinary people“ „We´ll face psycho shock“ „We´ll need pouches“ (europurses) „Seniors will face serious problems“ „We´ll become poorest euro nation“ „Neighbours are smarter – they wait“

19. 18 Published Daily newspapers (paid) Leaflets NBS website Partner websites Media support Voting options Phone call (paid) SMS (paid) Internet (free) RESULT: Over 140.000 votes

20. 19 Do you have enough information about the euro changeover (Slovak Stat´s)? Saturation with information

21. 20 What will euro mean for you, personally? (Slovak Stat´s) Public opinion on the euro

22. 21 Hurdles and troubles Everybody needs more money, staff... Public procurement process Short time for minting, sub/frontloading Slow legislation – amendments, modifications, exceptions Public sector is always slower Public myths to be fighted („teuro“, coins....) Always possible to find arguments against Good Reasons