Letting Another Cyprus In? The Dark Side Of Latvia’s Success Story

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Series Title
Series Details 02.10.13
Publication Date 02/10/2013
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Analysis report about Latvia's accession to the Eurozone.

Latvia decided on the 4 March 2013 to apply to join the eurozone in 2014 by signing the formal application which was handed over to the EU institutions the day after.

On the 7 June 2013, the European Commission gave Latvia the go-ahead to become the 18th member of the Eurozone at the beginning of 2014

Latvia pegged its currency to the euro after joining the European Union in 2004. It and Lithuania, which pegged in 2002, stuck with the links through two years of turmoil after 2008 which saw their economies shrink by up to a fifth.

Latvia's Financial and Capital Market Commission on the 18 June 2013 said it had imposed a fine of 100,000 lats (€142,543) - the maximum fine under Latvian law - on a bank involved in laundering over €170 million stolen from the Russian government.

Latvia will join the EMU at the beginning of 2014. At the same time, the country is adopting a regime of tax exemptions which favours non-residents. This has led many to believe that Latvia is choosing the same disruptive business model that was at the root of the Cypriot crisis. This article intends to figure out whether the conditions which nearly led Cyprus to collapse could be repeated in Latvia. It makes the point that, regardless of the growing similarities between the two countries, Latvia’s accession to the EMU should pose bigger questions related to some structural weaknesses in the eurozone governance’s architecture in the making.

Source Link http://www.social-europe.eu/2013/10/letting-another-cyprus-in-the-dark-side-of-latvias-success-story/
Related Links
EurActiv, 04.03.13: Latvia formally applies for eurozone membership http://www.euractiv.com/euro-finance/latvia-formally-applies-euro-zon-news-518221
ESO: Background information: Latvia and the euro http://www.europeansources.info/record/memo-latvia-and-the-euro/
EUObserver, 06.03.13: Latvia submits bid to join euro in 2014 http://euobserver.com/economic/119294
EUObserver, 05.06.13: EU commission says Yes to Latvia euro entry http://euobserver.com/economic/120386
EurActiv, 04.06.13: 18 and counting: Latvia set to join eurozone in 2014 http://www.euractiv.com/euro-finance/18-counting-latvia-set-join-euro-news-528276
BBC News, 04.03.13: Latvia applies to enter eurozone http://www.bbc.co.uk/news/business-21656254
BBC News, 05.06.13: Latvia to become 18th eurozone member from 2014 http://www.bbc.co.uk/news/business-22781146
Deutsche Welle, 04.03.13: Latvia formally applies for eurozone membership http://dw.de/p/17ptx
Deutsche Welle, 05.06.13: Latvia is headed for the eurozone http://dw.de/p/18k2w
Deutsche Welle, 05.06.13: European Commission approves Latvia as next eurozone member http://dw.de/p/18k05
ESO: Background information: Commission concludes that Latvia is ready to adopt euro in 2014 http://www.europeansources.info/record/press-release-commission-concludes-that-latvia-is-ready-to-adopt-euro-in-2014/
http://euobserver.com/economic/120568 http://euobserver.com/economic/120568

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