Answer to Question #82088 in Macroeconomics for Yemi

Question

Latvia is an European Union member nation aspiring to join the Eurozone. What factors determine whether it would in fact be beneficial to Latvia to join existing members and adopt the Euro?

Answer 1

The transition from the lat to the euro is primarily an economic project, and the invitation for Latvia to join is a confirmation of a healthy and strong economy. The euro is the second most important currency in the world: 40% of global trade transactions are conducted in euro and 25% of the world's foreign currency reserves are stored in this currency. Likewise, Latvian people and businesses have trusted the euro for years – almost half of deposits are in euro, more than 80% of loans are taken in euro, and 60% of external payments for products and services is made using the euro. The transition to the euro will cut the cost of servicing the national debt. Interest cost on servicing the national debt during the next ten years will average 90 million euro per year.

Source:

https://www.eiro.lv/en/media/media-kit/joining-the-euro-area-and-benefits-for-latvia