OREANDA-NEWS. June 11, 2013. The assessment of the compliance with the euro area participation criteria by the ECB experts is positive; it will be a serious message for the partners in their decision-making process on Latvia's participation in the euro area, should Latvia also receive a similar opinion from the European Commission.

A positive Convergence Report is no surprise; it is neither coincidence nor good luck; it is a result of hard work of recent years, overcoming the crisis and developing a stable economic policy framework enabling Latvia to ensure macroeconomic stability and balanced long-term economic growth sustainable also in the future. Already since autumn 2012 Latvia's compliance with the Maastricht criteria has been better than required; moreover, Latvia is among the three economies with the lowest inflation (and the highest price stability) whose performance is forming the basis for calculating the reference values of the price stability and long-term interest rate criteria.

The ECB assessment that further alertness and consistent adherence to the principle of balanced budget within the economic cycle is required, especially given the uncertainties regarding the global economic growth, is also expected and fully acceptable. Prudent policy, further structural reforms and strengthening of the financial sector is the best insurance policy against the economic and financial sector vulnerabilities and excessive future volatility risks in Latvia, the euro area and the European Union overall.

For Latvia as a country with its national currency, the lats, being pegged to the euro since 2005, whose economy is small and open, resilient and deeply integrated in the European economy and financial system, and who has been capable of swift and decisive action to overcome the economic turbulences of recent years, the euro changeover will imply essential gains, inter alia also much wider opportunities to contribute to the development of the European economic and financial policies in the future.

Latvia's euro changeover is a logical step since the euro as a currency plays a significant role in the Latvian economy already now. The euro is both the main settlement currency in Latvia's foreign trade transactions and the major currency in the balance sheets of Latvia's financial sector. Latvia has close economic and financial links with the euro area and the introduction of the euro will enable Latvia to engage in the ongoing discussions and analysis when developing the future policies of the euro area, becoming a participant in the process that will inevitably affect Latvia's economic outlook as well.