Summit News

CEE markets unmoved by euro timetable: Unicredit

VIENNA (Reuters) - Central’s Europe timetable to adopt the euro slipping should have little impact on the region’s financial markets, Willi Hemetsberger, head of global markets for UniCredit, said on Tuesday.

Speaking at the Reuters Central European Investment Summit, Hemetsberger said later adoption of the single currency in the region was not a big issue given its integration into the European Union and its structures.

“They (candidates in central Europe) all have credible central banks now, they are all well-anchored in democratic politics, they have, for the most part, sensible finances,” Hemetsberger said. “So this is not something that is on the mind of the market anymore.”

Poland, the Czech Republic, Slovakia and Hungary joined the EU in May 2004, and immediately set their sights on quick entry to the euro zone, which they see as beneficial for increasing trade as they integrate their economies with the richer west.

But the initial euphoria has given way to the realities of trying to tighten budgets, controlling inflation, and stabilizing currencies and interest rates while allowing their economies to converge with older EU members.

“The larger the country, the less there is a case for (rushing to) a common currency,” Hemetsberger said. “If Poland said it will need longer to make larger structural adjustments, I think the market would understand that.”

Slovakia is expected to be the first central European country to adopt the euro, with a target date of 2009, which Hemetsberger said is realistic.

The Czech Republic last year abandoned its 2010 target date, and has yet to set a new one for fear of missing it as well.

Hungarian officials have not set an official target date, but Prime Minister Ferenc Gyurcsany has said he sees sometime between 2011 and 2013 as reasonable for joining the euro zone.

Poland is close to meeting euro zone criteria on debt, currency stability and inflation and is only slightly off the budget deficit target of 3 percent of gross domestic product.

According to the latest government convergence plan, the Poles will fulfil all the adoption criteria in 2009, but a date for adopting the EU currency has not been officially set.

Hemetsberger, who sees the region’s main countries adopting the euro between 2012 and 2015, said he did not think the current global market turmoil would affect euro zone entry, nor did he think it would derail their booming economies.

“If you take the CEE 4, I think they will not be affected by the credit crunch, not any more than anybody else is,” he said.