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15th Aug 2022

Estonian cashpoints begin pumping out euro-notes

  • Tallinn skyline. 'This wasn't the glittering euro entrance you were promised' Krugman said (Photo: Steve Jurvetson)

Cashpoints in Estonia began issuing euro banknotes at around 20 minutes past midnight local time on Saturday (1 January) in a development marking the fourth phase of expansion for the troubled single currency.

Holding his clutch of banknotes outside a specially-installed cashpoint near a new year's eve gala venue, Prime Minister Andrus Ansip told press: "It is a small step for the eurozone and a big step for Estonia ... We are proud to be a euro zone member state."

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"For Estonia, the choice is to be inside the club, among the decision makers, or stay outside of the club. We prefer to act as club members."

Eighty five million euro coins and 12 million banknotes went into circulation in Estonia on Saturday and money in bank accounts was automatically converted from the kroon to the euro at the stroke of midnight. People will be able to exchange kroons at Estonian high-street banks until the end of the year and at the Estonian Central Bank with no time limit.

Meanwhile, Estonian Central Bank head Andres Lipstok will take part in his first meeting as a member of the European Central Bank's council on 13 January.

Estonia is the first former Soviet republic to join the currency club. Launched in 2002 with 15 members, it welcomed former Communist country Slovenia in 2007, followed by Cyprus and Malta in 2008 and by Slovakia in 2009.

Estonia is joining the currency area at a troubled time both for its own economy and for the euro itself, however.

Unemployment in the small country of 1.3 million people stands at 18 percent and its GDP has crashed in the past few years. In the wider euro-area, if Italy or Spain require a Greek or Irish-type bailout in 2011, the future of the single currency could be at risk.

European Commission chief Jose Manuel Barroso and EU parliament head Jerzy Buzek were unequivocally upbeat in their Estonia euro statements.

"Estonia's entry means that over 330 million Europeans now carry euro notes and coins in their pockets. It is a strong signal of the attraction and stability that the euro brings to member states of the European Union," Mr Barroso said in a statement.

"The euro is a common good ... [it] is both a world currency and one of the pillars of the European Union," Mr Buzek noted.

Nobel-winning US economist Paul Krugman wrote on his blog 40 minutes before the currency changeover, however: "Congratulations to Estonia - but condolences too. This wasn't the glittering euro entrance you were promised."

For her part, German Chancellor Angela Merkel, in her New Year's address, noted the political importance of the single currency and voiced concern over what the new year may bring.

"Europe stands in these months in the middle of a great test," she said on national TV. "The euro is much more than a currency ... A united Europe is the guarantor for our peace and freedom. The euro forms the foundation of our prosperity."

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