1. Before and After Maastricht: The Case of Slovenia Boštjan Jazbec Member of the Governing Board Bank of Slovenia Tabor, 23 May 2008 Views expressed are not necessarily views of the Bank of Slovenia.

2. Outline Problems with Maastricht Criteria Fulfilment Exchange Rate: Shock Generator or Absorber? Before and After Maastricht The Case Study: Slovenia

3. Strategies for Euro Adoption Wait for Real Convergence to Take Place Benefits of Euro Adoption? Beat the Mastricht Inflation Criterion by Exchange Rate Manipulation Entusiasm for Inflation Targeting

4. Economics or Politics? Change of Maastricht Criteria requires change of Treaty Problem with ECB Governance

5. The Case of Slovenia May 2004: Entry to EU June 2004: Entry to ERM2 January 2007: Adoption of Euro

6. Real Convergence Story?

7. Where Do We Stand Today?

8. Catching-up Process

9. Inflation Criterion: Slovenia 2004 - 2008

10. Is this Balassa-Samuelson Effect?

11. Structure of HICP

12. Food Prices in Slovenia and EMU

13. Activity, Employment and Wages

14. GDP Growth by Components of Expenditure

15. Contributions to Employment Growth

16. Financial Deepening

17. Lending to Domestic Private Sector

18. Interest Rates in Slovenia Loans to Non-financial CorporationsLoans to Households

19. Financial inflows

20. Current Account Development

21. Conclusions Maastricht Inflation Criterion Benefits of Euro Adoption Financial Stability Issue At least we cannot have exchange rate and B-o-P crises