The announcement that the Maltese lira was entering ERM II, although it had been in the air for the past few weeks, came rather too suddenly on Friday night.

Those of us who were following what was being written in the international press had tended to believe the Cypriot press which, after its earlier flutter on Cyprus and ERM, was saying that the announcement would come later on in May. Instead, the announcement came before April had even ended.

The mechanics of accession to ERM are covered in wall-to-wall regulations which insist, above everything else, on secrecy so as not to provoke speculative waves. That, on its own, might hinder a public discussion of such an important issue but it is a procedure that is accepted by one and all, big countries and small countries, and one does not see why it should not have applied to us.

Beyond that, there are two parties which are involved: the government and the economy of Malta, an applicant state, and the other parties in the ERM and in the euro: the European Commission, the European Central Bank, the central banks of the states in the euro and ERM, etc.

In simpler terms: it is not a case of Malta, being very ambitious and wanting to play in the big league, applied to join ERM and was allowed to do so, as one does with pesky children. If Malta was accepted in the ERM procedure, that can only mean one thing: Malta has passed the entrance test with flying colours. If Malta has been accepted, it is not because Malta insisted, pleaded, begged, but because the top people in so many European institutions saw that Malta’s entry was merited. Not even that Malta, either way, can do neither harm nor benefit. But that Malta’s economy was in line with the ERM’s strict restrictions.

There are, as the booklet Malta’s Strategy for Participating in Economic and Monetary Union and Adopting the Euro clearly explains, three sets of criteria that have to be fulfilled for a currency to be accepted in the ERM procedure.

These are:

• The Optimum Currency Area characteristics;

• The nominal convergence or Maastricht criteria and

• The real convergence indicators.

Up till recently, we thought that the Maastricht criteria was the only criteria that were needed, and, it is true, in some of these criteria, especially that regarding the government debt as a percentage of GDP and the public deficit as a percentage of GDSP, Malta was still not within them.

But it is now clear that:

• It is the Optimum Currency Area characteristics that are the most important, and that Malta fulfils them all: an open market economy, labour mobility, nominal wage and price flexibility, similarity in economic structures, synchronisation of business cycles, financial integration to a high degree, and fiscal policy flexibility.

• That, as regards the Maastricht criteria, they are not absolutes, but indicative: what matters, in other words, is the direction, not the strict percentages.

And so it came to be that the European institutions gave the nod and the Maltese government, having studied all the angles, made the application, and as a result the Maltese currency is now in the ERM II.

The move has been a seamless one: the Maltese currency joined the ERM on the very same exchange rate it had on Friday. It is now locked to the euro and everyone can now breathe a little easier, since what the Maltese lira has been doing these past 40 years has been risky and nothing short of the miraculous. Fortunately, it is now locked into the euro which is a world currency and which can provide the Maltese currency and economy with a strength it lacks on its puny own.

It has been a seamless transition in that it certifies that the economy is on the mend, that the correct measures are being taken to address the deficit and the debt issues, which are the principal problems which affect Malta’s economic growth.

It is a seamless transition for it avoids speculation and uncertainty, it reinforces what is already being done and it looks ahead at the way through which growth and prosperity can come.