The EU, by contrast, wrote in its Convergence Report on Latvia in early June that the country's financial system is stable. Latvian Prime Minister Valdis Dombrovskis has also sought to calm worries. "The new tax law was introduced in order to strengthen the competitiveness of our financial marketplace, but it will definitely not create a massive capital influx," he said recently in an interview with SPIEGEL ONLINE. "The law does not conflict with the stability criteria of the euro zone."
In reality, however, the stability criteria do not call for an analysis of the risks posed by the Latvian tax model, despite the problems encountered by Cyprus. "It is a mistake that euro-zone member states only look at inflation and the health of public finances when new countries are admitted to the currency union," says Green Party politician Giegold.
He demands that laws be made consistent with the euro-zone norm. But that doesn't seem realistic. As long as countries such as euro-zone founding-member Luxembourg continue to defend their own financial marketplace, tax havens will continue to be admitted to the common currency area. And they will continue to present even more risks to the already shaken currency.