CRI听力:Latvia Joins the Eurozone

This year's traditional New Year celebrations in Riga are particularly significant as Latvia starts a new chapter in its modern history by joining Europe's single currency bloc.

"It's a country that is very much based on exports, 60 percent of GDP is exports, so it must be very nice for exporting companies, exporting to Finland, to Estonia, to Germany (because) it will be the same currency, all these transaction costs will go away."

Professor Morten Hansen, Head of Economics Department of Stockholm School of Economics in Riga, explains how eurozone membership will benefit Latvia.

Head of the Euro Office of the Latvian Ministry of Finance Arina Andrei?ika also weighs in.

"We see that the main benefit is stability. And of course we are also expecting that we will have new investment, and also new investors. And also our credit ratings will be increased. "

Latvia joined the European Union back in 2004 - promising then to adopt the Euro at a time of its own choosing.

Its national currency, the lats, had been pegged to the Euro since 2005, and plans were afoot to adopt the euro in 2008. But the global financial crisis and subsequent eurozone recession put paid to that.

For the past few years, however, under tough monetary policies, the Latvian economy has been on an upward trajectory - with 5% GDP growth two years in a row and relatively low level of debts.

During its last assessment in June 2013, the country met all the convergence criteria necessary for adopting the euro, and membership was approved soon after.

What is more significant is that by adopting the Euro, Latvia becomes more integrated into the European family.

Arina Andrei?ika from the Latvian Ministry of Finance.

"From our side we are expecting that we will be really an active partner, participating more actively in all initiatives of European Union and eurozone."

But not all Latvians favour joining the troubled single currency.

Now if you walk into any Latvian supermarket, you will see a dual price display on every product.

Apart from Yanis, some other shoppers have also expressed their dislike of replacing their national currency with the Euro.

"One should take a look from the historical point of view."

Juris Kravalis, Head of International Relations at the Bank of Latvia – the country's central bank empathises with the concerns of ordinary people.

"People are very well remembering what was happening when we regained independence, what was happening in the last years of the Soviet Union--there were several monetary reforms. I mean, any monetary reform, whenever currency was changed, people lost their purchasing power, or their money."

But Kravalis is adamant that history won't repeat itself this time. He predicts Latvia's flagging inflation rate will increase by only 0.2-0.3 percentage point in 2014.

And in order to convince a skeptical public, in July 2013, a corporate initiative called "Fair Euro Introducer" was launched by the government in conjunction with business groups and the public. In joining this initiative, participants publicly pledged not to use the introduction of the Euro as an excuse for price hikes.

The real test though begins today.

And despite a rocky few years for the Euro with questions remaining over its long-term survival, Professor Hansen still believes that Latvia's adoption of the Euro has come just at the right time.

"It can contribute success, I think the eurozone right now needs a success story, it is in struggle in many parts of the eurozone and therefore I think they are very happy to see that another country actually wants to join."

Latvia is the second Baltic country to join the Euro - after Estonia in 2011. Their neighbor Lithuania is planning to adopt the single currency in 2015.

For CRI, this is Jingnan reporting from Riga, Latvia.