cyprus and malta ready for euro adoption
28 November 2007

With only five weeks to go before the adoption of the euro by Cyprus and Malta, the European Commission has concluded that both Member States are well prepared for the introduction of the euro. 

"This is something the Cypriot and Maltese people can be proud of because they will become part of the largest monetary area of the developed world, which has delivered an unprecedented period of price stability and favourable financing conditions for businesses and households alike," noted Joaquin Almunia, European Commissioner for Economic and Monetary Affairs. "They must embrace this important step with confidence, but also with their eyes wide open to make sure that they are fully familiar with the new currency and to detect, and challenge, any abuse. Public authorities must also be careful and pursue policies that continue to deliver economic stability as a precondition for sustained growth and job creation."

The European Commission has adopted the sixth report on the practical preparations for the enlargement of the euro area. As regards Cyprus in particular, the Commission has concluded that preparations for the introduction of the euro "have progressed considerably and the country seems to be generally well prepared”.

However, public opinion on the euro changeover remains mixed. A total of 67% feel that they are 'rather well' or 'very well informed' about the euro, according to a Eurobarometer survey carried out in September, which represents an increase of 14 percentage points compared with an earlier poll in April this year. This is the result of the increased communication efforts. But nearly three quarters of the respondents fear price increases on the occasion of the changeover.

A majority (60%) of the euro coins ordered by Cyprus arrived mid-October, with the remainder expected to be delivered by the end of this month. The Cypriot coins were produced by the Mint of Finland following a public call for tenders.

The required amount of euro banknotes also arrived at the Central Bank in the course of October. Unlike euro coins, which are produced by each euro area country, banknotes are borrowed for the time being from an existing common stock.

The 'frontloading' of commercial banks started on 22 October, for coins, and 19 November for notes. The Cyprus Central Bank estimates that the banking sector will receive approximately 80% of the value of the euro banknotes needed for the national economy before January. The equivalent value in coins is 64%.

Banks will, in turn, provide retailers with euro cash before January, so they can give change exclusively in euro from day one. A total of 40,000 pre-packed euro coin kits for businesses (worth EUR172 each) and 250,000 mini kits for the general public (worth EUR17.09 each) will be on offer as from the 3rd of December.

At least 70% of the country's 550 bank cash dispensers will be ready to dispense euro cash by 1am on January 1, with the remainder expected to be converted into euros by the end of that same day.

The Central Bank of Cyprus has estimated that more than 60 million euro banknotes (worth EUR1.2 billion) and 395 million euro coins (worth EUR100.26 million) are necessary. The Republic of Cyprus had a population of 778,684 at the beginning of 2007.

According to the Cypriot government, recent surveys indicate that the Cypriot enterprises are well prepared for the changeover, and that they did not experience any significant problems in the course of their preparations.

The Cypriot authorities have further strengthened measures with a view to enhancing consumer confidence: about 7,130 enterprises, including larger retailers and banks, subscribed to the Fair Pricing Code launched by the government in July 2007. The dual-display of prices, compulsory since September, is monitored by five Euro Observatories. The Ministries of Finance and of Commerce and Industry also monitor prices, in cooperation with the statistics office and the consumers association.

Ulrika Lomas, Tax-News.com, Brussels