Czech central bank governor calls for change in euro adoption criteria

Czech National Bank Governor Zdenek Tuma has called for flexibility in the euro adoption criterion on inflation, saying it was designed for a different situation from that of today's euro hopefuls. Mr. Tuma told a conference this week that the Maastricht Treaty rule governing eurozone entry may bee too strict for east European countries and could force them to push inflation too low. The criteria for euro adoption include inflation, debt, interest rates, currency stability and budget balances. The inflation rule, which was set years before the euro zone existed, allows price growth to be at most 1.5 percentage points above the average of the three best performers in the EU. Mr. Tuma said it could be politically difficult to change the rules, and therefore the way forward may be to take into account the overall economic fundamentals and balance. However, European Central Bank board member Gertrude Tumpel-Gugerell told the same conference that the applicants would not have as much trouble with the inflation and interest rate rules as with the need to cut their budget deficits, which might be a tough task especially for the largest candidates like Poland, Hungary and the Czech Republic.