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Principles of Euro Introduction

The basic principles for the euro introduction in Slovakia are determined in the National Euro Changeover Plan. The prepared legal legislation and other details of changeover to euro are based on these principles.

  1. Big-Bang scenario – the euro was introduced simultaneously in both cash and non-cash circulation as of 1st January 2009
  2. Short Dual Circulation – two weeks during which we could stil pay by Slovak banknotes and coins
  3. Conversion Rate
  4. Continuity of contracts
  5. Rules for rounding
  6. No harm to the citizen – state rounds up its payments due to the citizens
  7. Cost Minimisation
  8. Responsibility – Every organisation was responsible for its preparations and covered costs for introduction of euro on its own 

Short dual circulation

After the euro introduction on 1st of January 2009, it wasl possible to pay cash besides euro banknotes and coins also with the koruna banknotes and coins until 16th of January 2009. However, change was only given back in euros. From the 17th of January 2009 onward, It was possible to pay only in euro. The dual circulation period in Slovakia lasted 16 days, which is less than in the first twelve countries of the eurozone where this period lasted for two months. The experience has shown that such a two-month period is uselessly long and costly. The big majority of cash was exchanged during the first week of 2009.

Conversion Rate

For the conversion of prices, amounts to be paid and other financial values after the 1st January 2009 only one single exchange rate could be used-> Conversion Rate (30.1260). Conversion Rate was set as a six-digit coefficient. All prices are converted by this six-digit exchange rate, no rounding of conversion rate is allowed.

NO OTHER RATE THAN THE CONVERSION RATE MAY BE USED TO CONVERT PRICES AFTER 1st JANUARY 2009 This rule is established at the EU level (Council Regulation (EC) No 1103/97 on certain provisions relating to the introduction of the euro).

Continuity of contracts

All contracts remain valid after 1 January 2009; the amounts due are paid in euros recalculated by the Conversion Rate.

  1. Contracts may not be terminated unilaterally solely due to the euro introduction.
  2. Nevertheless, the principle of the freedom of contract is not limited – the parties may stipulate their contracts to explicitly euro values.

This rule is established at the EU level (Council Regulation (EC) No 1103/97 on certain provisions relating to the introduction of the euro). It thus applies to all contracts in the EU Member States, not only to the contracts subject to the Slovak law.

Rounding rules

Financial amounts expressed in koruna which need to be recounted or paid for in euro l be converted at the Conversion Rate and then rounded to the nearest euro cent applying exact mathematical rules. This rule is established at the EU level (Council Regulation (EC) No 1103/97 on certain provisions relating to the introduction of the euro). The law or other standards may prescribe the case when the recalculation needs to be precisly rounded to more decimals.

No harm to the citizen

The principle of ‘no harm to the citizen says’ that the payments due from the state to citizens (pensions, social benefits....) are rounded up and, vice versa, all payments due from citizens to the state (e.g. taxes, local charges...) are rounded down. The amounts due are rounded to euro cents, however, they may also be rounded to the nearest 10 cents as long as it is more beneficial to the citizen.

Example 1:

A pensioner receives the pension in the amount of SKK 8,500. Following the changeover, the pension was recalculated at the conversion rate (e.g. 1EUR = 35.4424 SKK) and the resulting amount was be rounded up to the nearest 10 cents.

Example 2:

A citizen had a duty to pay to the municipality a dog tax of SKK 1,200. The tax was recalculated at the conversion rate (e.g. 1EUR = 35.4424 SKK) and the resulting amount was rounded down to the nearest 10 cents, in line with the ‘no harm to the citizen principle’

 

Old-age pension

 

Amount

Calculation

Rounded

8,500 SKK

239,83 EUR

239,90 EUR

Conversion rate: 1 EUR = 35,4424 SKK (example)

 

Dog tax

 

Amount

Calculation

Rounded

1,200 SKK

33,86 EUR

33,80 EUR

Conversion rate: 1 EUR = 35,4424 SKK (example)

Cost minimisation

The changeover cost should be as low as possible. This is why a decision was taken to introduce the euro either under the Bing-Bang or Short Dual Circulation scenario. Likewise, the rules laid down in the legislation that regulates the changeover process were set in a manner that avoids unnecessary costs. However, it was up to those who incured the changeover cost to keep those costs for introduction of euro as lowest.

Responsibility

Each entity was responsible for its own preparations for the changeover, including the costs associated with the preparations coming along with introduction of euro.

 


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