Final Word from Wednesday, November 13, 2013

Much has been made of the fact that Václav Klaus is among the strongest critics of the currency intervention undertaken last week by the very Czech National Bank board that he appointed as president. Klaus and his institute have issued two comments on the matter, one on the day of the intervention and another yesterday, both of which were sharply critical of the inflation-targeting aspect of the decision. Klaus is considered a euroskeptic, but unlike some other observers, he hasn't yet speculated that the CNB's move was coordinated with the European Central Bank. One theory is that the CNB has suddenly dropped its own euroskeptic stance and, in the absence of a Czech government policy on a date for euro adoption, has stealthily adopted its own timeline. Gov. Miroslav Singer's announcement today in MFD that the crown will remain at Kč 27/euro for at least a year and a half looks suspiciously like an unofficial application to ERM II. If true, fans of euro adoption can rejoice, even if they aren't very happy with the Kč 27/euro exchange rate. [Czech Republic ECB European Exchange Rate Mechanism deflation]

Glossary of difficult words

ERM II - an intermediary step to joining the eurozone, during which the national currency must be kept within a +/- 15% band around a central rate against the euro;

inflation targeting - a central-bank policy based on meeting preset targets for the annual rate of inflation;

stealthily - behaving, made or done in a surreptitious manner, so as not to be seen or heard;

timeline - time schedule.

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