Brussels, 28 December 2007
In three days' time, Cyprus and Malta will adopt the euro, which will then be shared by 15 out of the 27 EU Member States and a population of 320 million.
"The adoption of the euro is a historic event for Cyprus and Malta, which join the euro area only four years after they became members of the European Union. Welcome and Good Luck', said Joaquín Almunia, European Commissioner for Economic and Monetary Affairs. He added: "The euro is a strong and stable currency which has brought most of the 13 countries that already share it their lowest inflation for at least five decades and very favourable interest rates. But as Cyprus and Malta embark on what is admittedly the most tangible aspect of EU integration, they must also remember that euro area membership requires a continued commitment to sound public finances and structural reforms to be able to flourish in, and reap the benefits of, monetary union".
The June 2007 European Council welcomed the adoption of the euro by Cyprus and Malta in January 2008, after the Commission concluded in Convergence Reports adopted a month earlier that they met the qualifying Maastricht criteria. The formal decision was taken by the ECOFIN Council in July, including the decision on the conversion rate. The Cyprus pound corresponds to € 1.71 and one Maltese lira to € 2.33.
Since that date, both countries have completed and finalised their practical preparations which should ensure them a smooth changeover to the euro.
Cyprus borrowed the necessary euro banknotes from the Eurosystem stocks via the Bank of Greece and received its euro coins from the Mint of Finland, following a call for tenders.
The Central Bank of Cyprus has been supplying euro cash to the banking sector since October which, in turn, has been supplying retailers and other businesses in a still-ongoing operation. Even on 31 December, which will be a special bank holiday to allow for the conversion of the banks' IT systems to the euro, retailers will be able to receive euro cash from their banks.
Since 1 November, some banks have been offering citizens the possibility of exchanging Cyprus pounds into euro banknotes at the conversion rate and without exchange charges. Citizens have also been able to purchase mini-kits of euro coins in advance to be able to familiarise themselves with the new currency.
On 1 January, despite it being a public holiday, a number of bank branches in town centre locations will open throughout the country to facilitate the exchange of cash. By 1 a.m. at least 70% of the country's 550 ATMs will have been programmed to dispense only euro banknotes. The remaining 30% should be converted to euros by noon on the same day. To ease the process and limit the amount of change handed back in shops, ATMs will dispense only € 10 and € 20 banknotes in the first weeks.
Those consumers who still have national cash after the dual circulation period ends on 31 January will be able to exchange it for euros free of charge until 30 June, the ceiling for a single transaction being CYP 1,000 for banknotes, CYP 50 for coins. The Central Bank will continue to exchange national coins for euros until 2009 and notes until 2017.
In Malta, the supply of euro cash to banks started in mid-September, after the Central Bank received the coins ordered from the Monnaie de Paris, the French mint. The euro banknotes were borrowed from Eurosystem stocks, via the Bank of Italy.
Since December, banks have been delivering euro cash to retailers and other businesses, so that they can also give change in euro as from 1 January. Citizens have been able to acquire one or more of the 330,000 euro coin mini-kits on offer since 10 December.
Banks will be closed on 1 January, but at least 60% of the 154 ATMs operated in Malta will have been programmed to dispense euro banknotes at 0.00 on 1 January, while the remaining 40% will gradually follow over the course of the day, the whole conversion operation being completed by 4 p.m. As in the case of Cyprus, they will dispense only small euro denominations to begin with.
On 2 and 3 January, banks will devote their business to over-the-counter business with the public for cash deposits, foreign currency exchange and exchange into euro.
Until the end of March 2008, commercial banks will exchange Maltese lira cash into euro free of charge, in unlimited amounts for their customers and up to MTL 250 for non-customers. The Central Bank will continue to exchange Maltese lira coins and notes until 1 February 2010 and 2018, respectively.
The dual circulation period, during which legacy currency may still be used for payment in parallel with the euro, ends, as it does in Cyprus, on January 31st.
The euro was created in 1999 as a scriptural currency and in 2002 as cash, at which point it was shared by 12 EU countries. Slovenia became the 13th euro area member in 2007.
Cyprus and Malta are the two smallest economies in the euro area. Their population was 778,684 and 407,810 respectively at the beginning of 2007.
In 2006 Cyprus’s per capita GDP was 92% of the EU average.
Malta’s was 77%.
For the national changeover preparations see: