Final Countdown To The Euro In Cyprus And Malta
Final Countdown To The Euro In Cyprus And Malta
In only 10 days Cyprus and Malta will adopt the euro, bringing to 15 the number of European Union countries that share the same currency. The final practical preparations are well under way and banks, retailers and consumers seem to be ready for the changeover.
Banks and enterprises have been receiving supplies of euro banknotes and coins to be able to handle transactions in euro as from 1 January. Euro coin mini-kits have also been available for citizens since early December, to help them familiarise themselves with their new currency before €-day.
Cyprus and Malta will adopt the euro on 1 January 2008 at the rate of 0.585274 Cyprus pounds and 0.429300 Maltese lira to one euro. This means that one Cyprus pound corresponds to € 1.71 and one Maltese lira to € 2.33.
From January, the euro area will include 15 out of the 27 EU countries and a population of 320 million out of the EU's total of 495 million. 2008 will mark the second enlargement of the euro area since 2002 - Slovenia having already adopted the single currency on 1 January 2007.
The final practical preparations for the euro changeover in Cyprus and Malta are proceeding well and according to the countries' national changeover plans.
Commercial banks started receiving euro coins from the Central Bank of Cyprus on 22 October, and euro banknotes on 19 November. The Central Bank of Cyprus estimates that the banking sector will be supplied with approximately 80% (in value rather than volume) of all euro banknotes needed for the national economy before 1 January, and 64% of the necessary coins.
Businesses, notably retailers, are currently receiving euro cash from their banks. This will ensure that they can give change exclusively in euro as from day one and will help speed up the cash changeover. Moreover, since 3 December, a total of 40,000 pre-packed euro coin starter-kits for businesses (worth € 172 each) and 250,000 mini-kits for the general public (worth € 17.09 each) have been on offer.
Recent survey results indicate that the Cypriot enterprises are well prepared for the changeover and have not experienced any significant problems. About 7,130 businesses, including larger retailers and banks, are participating in a Fair Pricing Code launched by the government in July 2007 whereby they commit to behave fairly and not to seek advantage from the changeover. A logo displayed on shop windows attests to their adherence to the Code. The dual display of prices in the Cypriot pound and euro has been compulsory since September, helping consumers to get used to the new scale of values. Its implementation is monitored by five Euro-Observatories whose inspectors regularly visit retail outlets throughout Cyprus. The Ministries of Finance and of Commerce and Industry monitor price developments in cooperation with the statistics office and consumers' associations.
The frontloading of the banking sector with euro cash by the Central Bank of Malta started in mid-September. The Central Bank estimates that about 92.5% (again, in terms of value rather than volume) of the 41.5 million euro banknotes that are needed to replace the Maltese lira will be supplied to banks before 1 January 2008, as well as 71% of the 140 million euro coins needed in the Maltese economy.
The supply of euro cash to the business sector started on 1 December. Moreover, 33,000 euro starter-kits for businesses (worth € 131 each) and 330,000 mini-kits for the public (worth € 11.65) have been available since 1 and 10 December 2007 respectively.
Because Malta has a particularly high level of cash in circulation, the Central Bank has for several months been encouraging the public to deposit excess cash with banks, in order to reduce the volume of cash to be exchanged after €-day. The national cash in circulation which will be returned to the Central Bank as from 1 January is estimated to amount to approximately 37 million banknotes and 128 million coins.
According to recent survey results, Maltese businesses are well prepared for the euro. Dual display of prices has been mandatory since 11 July 2007. More than 6,500 enterprises, representing about 80% of all retail outlets, have committed not to increase the prices of goods and services "for the reason that a monetary changeover is taking place", by subscribing to the FAIR price initiative, which was launched by the National Euro Changeover Committee. The Maltese authorities also have a 'PriceWatch' scheme in place to assess price developments and inform consumers. All these measures are crucial to enhance consumer confidence around the changeover. In addition, consumers themselves must be on the alert and should challenge any unfair business and any price abuses in the changeover period.