In a timely workshop held on 17 February in the Economic and Monetary Affairs committee of the European Parliament, MEPs examined the effects of the current financial crisis on the non euro-zone new Member States. The seminar was held just as financial turmoil is enveloping these countries of central and Eastern Europe, with banks collapsing and unable to access capital from western sources, equity markets collapsing and credit rating agencies downgrading their assessments.

Participants at the workshop pointed out the difficulty, in the current context, for New Member States to meet their legal obligations under their accession treaties to align their fiscal and economic policies with those of the euro-zone and the urgent need for the EU to demonstrate solidarity by making available financial assistance and EIB support.

Daniel Daianu MEP (Romanian Liberal Party) a former Romanian finance minister and current ALDE member of the Economic and Monetary Affairs committee argued that "the impact of the current economic crisis is very severe, and a case by case approach is not sufficient anymore in dealing with it. The new Member States need assistance and so do the banking groups".

The Romanian MEP also underlined his worries about the speculation on currencies and the situation of the banks operating in Central and Eastern Europe: "Mother banks encounter considerable difficulties and the impact of the economic downturn on their subsidiaries in the new Member States is extremely severe. The EU summit of March 1st must address the issue of financial stability in the non euro-zone new Member States very seriously. It is more urgent than ever", warned Dăianu.

Apart from it becoming increasingly difficult for new Member States to meet the Maastricht crteria, the workshop also pointed out that pursuing euro-zone membership in the present climate carries the risk of economic overheating and loss of competitiveness, although once inside the euro-zone, the fiscal and structural reforms will deliver positive long-term benefits. It was also considered that exchange rate flexibility, whilst a tempting monetary tool for easing money supply and absorbing some of the present financial shock, was also becoming a source of instability and shock itself. The contrasting experiences of Ireland and Iceland offered some evidence of the shelter that can be provided by membership of a larger currency area.

Note:
The workshop included speakers from academia such as György Szapáry, Leszek Balcerowicz and Daniel Gros as well as high level officials from the New Member States like Ludwik Kotecki, Deputy Minister of Finance in Poland, Ferenc Karvalits, Deputy Governor of the Hungarian Central Bank, Valentin Lazea, chief economist at the Romanian National Bank and Hans-Joachim Klöckers, Deputy Director-General at the European Central Bank (ECB).