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Wednesday, January 29, 2003

Sweden Delays Euro Entry Date

In a decision which for once speaks of wisdom and sense of judgement Sweden on Tuesday ruled out an early move to join the euro, even if voters give their backing to the single currency in September's referendum.Gunnar Lund, the minister responsible for euro issues, said the country would adopt the euro in 2006 to give its banking system, government agencies, and large companies plenty of time to prepare for the currency switch in the event of a "yes" vote in the referendum. The government had previously indicated that January 1 2005 was its preferred date for joining the single currency, with notes and coins to be introduced a year later. It is now planned that, in the event of a referendum yes both events will take place simultaneously. A bit more time for the institutions to prepare, and a bit more time to see whether the Euro's current ills are (as many of us fear) endemic to the system, or whether they are mere teething problems. In any event the opinion polls offer no clear forecast for September, with opinion divided roughly 50-50.

Mr Lund said the central bank and the country's leading banks had indicated that a 15-month transition period between the referendum and January 2005 was too short for them to change their IT systems and test them fully.He said: "A big bang solution will be smoother and more secure for everybody involved. It will also be cheaper because banks and companies will not have to invest in systems that only need to be in place for a year."Klas Eklund, chief economist at SEB, one of Sweden's leading banks, said that it was impossible for banks and companies to start preparing their systems before the referendum, given that the outcome of the September 14 poll was likely to be close.The latest opinion polls have shown the "yes" and "no" camps running neck-and-neck.A Temo opinion poll last week gave euro opponents 44 per cent support, and supporters 43 per cent. Another poll gave the "yes" camp a 39.5 per cent to 39.3 per cent lead. Swedish opposition to the single currency increased during the autumn before stabilising this month. The "no" side is benefiting from perceptions of Germany's economic weakness and the fact that the Swedish economy is doing better than the eurozone's. Opponents also expect to benefit if Gordon Brown, the British chancellor (finance minister), decides the time is not right for the UK to apply to join the euro, when he presents the results of his five economic tests by June.
Source: Financial Times

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