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Last week, Slovakia received its anticipated green light from the European Commission to adopt the euro. Speculation has been widespread in the country that joining the common currency will lead to increases in real consumer prices, as it has in other nations.
Slovak daily SME reports today that left-wing Prime Minister Robert Fico is proposing to make “speculative” pricing around euro adoption a crime (my translation from Slovak):
Police to Pursue Pricing
BRATISLAVA. Speculation with the prices of goods and services upon converting to the euro should be a crime. According to Justice Minister Štefan Harabin, the Ministry of Justice has responded to statements from Prime Minister Robert Fico and begun working on an amendment to the Criminal Code.
The amendment should set so-called “machinations” around the euro transition outside the law. It would concern unjustified speculation around transition to the euro currency which harms consumers. According to the Ministry, prison or fines should befall all who would wish to “enrich themselves or harm others in determining pricing for goods or services in euros.”
The Ministry did not make clear, however, what precisely is meant by machinations around the euro transition.
“This is in conflict with a market economy; it is a principle of socialist economics,” said [lawyer] Gazareková at length. In her view, it is interference in the functioning of the market.
Juraj Karpiš, an analyst with the institute INESS, cautions that such regulatory activity from the government could lead to early price increases even before euro adoption. Businesses will be particularly afraid that after the euro transition they won’t be legally able to change prices so as to provide for a new situation in the market. Thus, they’ll prefer to do so in advance.
“Pricing is purely a matter for businesses, and it’s up to them alone how much they will sell their property for,” Karpiš said.
But let’s not allow reality intrude to now, Messrs. Fico and Harabin. And let’s not call out the hypocrisy of using the law as a tool to benefit the “little guy” consumers here as opposed to the “big bad” businesses when the Slovak central bank has been sticking it to importers (meaning anyone buying anything from outside the country: food, clothing, medicine, etc.) to the benefit of (a comparatively few) exporters through its own “machinations” under the ERM II exchange rate criteria in the face of a continuously strengthening local currency for years. No no, that wouldn’t do at all.
Related, and in English: Fico: Government Ready to Regulate Prices against Chisellers