Francesca Vella

Malta, together with Cyprus, will adopt the euro tomorrow, bringing the number of EU countries that share the single European currency up to 15.

Without any doubt, the euro changeover was one of the topics that the Maltese spoke about the most over the past couple of months and the subject will only get hotter as the euro becomes legal tender as from tomorrow.

Will the cost of living increase when we adopt the single European currency? Will it be confusing to handle cash in euro? How can I tell that prices are not on the increase due to the euro changeover?

These and many more questions have fuelled debates among the Maltese and an air of uncertainty and fear naturally still prevails, with people wondering how the euro will really affect their lives.

Unfortunately, the Maltese people’s impression of the euro has been affected, to some extent, by euro adoption in Italy, characterised by a level of abuse and price increases.

The euro area will now include 15 out of the 27 EU countries and a population of 320 million out of the EU’s total of 495 million.

New year 2008 will mark the second enlargement of the euro area since 2002, when Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, Holland, Austria, Portugal, Finland and Greece adopted the currency. Slovenia adopted the single currency on 1 January 2008.

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The supply of euro cash to the business sector in Malta started on 1 December. Moreover, 33,000 euro starter-kits for businesses (worth E131 each) have been available since 1 December, while 330,000 mini-kits for the public (worth E11.65) have been available since 10 December.

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 per cent 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 authorities also have a “PriceWatch” scheme in place to assess price developments and inform consumers.

All these measures are crucial to enhance consumer confidence during the changeover. In addition, consumers themselves must be on the alert and should challenge any unfair business and any price abuses during the changeover period.

The final practical preparations have long been well underway and banks, retailers and consumers seem to be ready for the changeover.

While Malta will change over to the euro at the rate of 0.4293 Maltese lira to one euro, Cyprus will change over to the single European currency at the rate of 0.585274 Cyprus pounds to one euro. This means that one Cyprus pound corresponds to E1.71 and one Maltese lira to E2.33.

In Cyprus, 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.

It is interesting to note that a Cypriot delegation had visited the Maltese National Euro Changeover Committee to learn from the measures implemented to ensure a smooth changeover to the single European currency.