Monetary policy in the accession process and the strategy of adoption of the Euro in the Slovak Republic

Monetary policy represents one of the key issues of the integration process of Slovakia into the Economic and Monetary Union (EMU). Within economic policies, it fulfills a stabilisation. function and in the EMU accession process, monetary policy together with other policies are helping fulfilment of the Maastricht criteria by a targeted time limit for accession. In the first section, the article deals with issues to be faced by the monetary policy in the process of accession. The questions discussed here include the selection of a monetary strategy, as well as possible procedures for disinflation and the issue of exchange rate policy, which will in time gain in importance. In this context, account is given of the circumstances of membership in the ERM II, whose purpose is to prepare conditions for introducing a common currency in accession countries. It is noted that the monetary policy operates within the context of a whole economic policy complex and it is exactly the coordination of its individual components that constitutes a prerequisite for building up credibility vis-A-vis markets and thereby a sustainable favourable economic development. In the second section, we provide a summary of a range of issues, which will have to be solved as part of the process of accession to the EMU, and an indication of their size. The improvement of indicators decisive in terms of the entry is preconditioned by completing reforms with which certain costs will be associated. From this viewpoint, the most important is a reform of the public finance system associated with reforms in other areas, (particularly pension and health care system reforms), which have to do with the fulfilment of the budget criterion. The performance of the inflation criterion came under pressure, chiefly due to the postponement of price deregulations. These facts also influence conditions for meeting the debt and interest rate criteria. A consistent strategy for the process of accessing the EMU will require a close coordination of actions taken by the government and the National Bank of Slovakia (NBS), especially when it comes to the harmonisation of monetary, fiscal, and other policies. A successful assertion of the strategy is preconditioned by a social consensus with regard to the reforms needed. This will require cooperation between the two entities and employers and trade unions, especially when it comes to the regulation of wage development. Last but not least, an efficient information campaign targeted at the population at large, will be required.