The foundations for Malta’s move from the lira to the euro have been laid.

Late in April, the Maltese lira joined the Exchange Rate Mechanism for a two-year “apprenticeship” period before the euro replaces it completely as Malta’s new currency.

It is therefore a time of transition, and this time must be used well so that the switch from the lira to the euro is carried out with the fewest hitches possible. The experiences of other European countries that have already changed their currency should be – and we are in no doubt that they will be – used for Malta to avoid any of the difficulties that they might have encountered.

The switch from the lira to the euro is expected to be made not before 1 January 2008, and therefore Malta has more than two years to prepare for such a delicate move. The older generations will still remember the change from the pound to the lira in the early 1970s, and the complications that arose until the new system was absorbed. Today, we are better equipped, in terms of communications, to get the message across and therefore the exercise should be easier.

We will now have to brace ourselves for another switch which will have a direct bearing on the way we think and the way we count our money. Like any other change, the move from the lira to the euro must be accompanied by a change of culture and a change of mentality.

The setting up of two committees to help out in this transition period was welcome news. Earlier this week, the government announced the creation of a Steering Committee for the Euro Adoption and the National Euro Changeover Committee (NECC).

The first will be reporting to the Cabinet of Ministers directly and will monitor the progress and preparation of the government sector and the economy. The latter will report to the steering committee and its job is to set up and coordinate all national initiatives required for the changeover.

In the words of NECC chairman Joseph F.X. Zahra, the committee will be working on logistics and information. Central Bank governor Michael Bonello explained that an information campaign is fundamental to ensure a smooth transition.

Thirty months might seem an eternity at this stage, but no time can be wasted in this regard. The information campaign that will be embarked upon must therefore ensure that people will get everything they need to understand the implications of such a change. And schools cannot be neglected, as Malta prepares for this important reform.

One important aspect, which will certainly create controversy when the time comes, is the potential inflation that the switch from the lira to the euro might cause when the change actually takes place.

In this regard, Parliamentary Secretary Tonio Fenech has stated that the shift should not affect prices. However, he went on to add that guidelines will be drawn up allowing a maximum margin of profit in the rate of exchange charged by commercial outlets and that anything charged above this fixed margin would be considered as an infringement.

This statement could be interpreted as meaning that the government is envisaging an increase in prices, but that this would not exceed certain pre-established limits. One asks: will inflation be affected or not? We have to wait and see.

These are all issues that the two committees must contend with in the months to come as plans for the change are drawn up. The government must ensure that the transition will not be a bumpy ride that will enable some to take advantage of the situation. People must be aware of what they will be in for.