An effective information and communication campaign can greatly reduce the public’s concerns that prices will increase following the introduction of the euro currency.

Experience in member states that adopted the euro in 2002 has shown that in those countries that were well-prepared and effectively communicated details of the changeover to the public, the perception that inflation had increased was considerably lower.

An expert from the DG Ecfin of the European Commission, Nabil Jijakli, said that after the euro was introduced in 2002, only 0.3 per cent of inflation was found to be due to the euro.

The governor of the Central Bank, Michael Bonello, said that Italy had one of the lowest rates of inflation in the EU at the time, but because the Italians were not prepared for the changeover, the perceived inflation was much higher, giving rise to the belief that the euro currency was a bad thing and led to higher prices.

Mr Jijakli and Mr Bonello were speaking during the presentation of the updated master plan for the euro changeover at the Mediterranean Conference Centre yesterday.

The European Commission, Mr Jijakli said, strongly recommends mandatory but flexible dual pricing as one way to counter these misconceptions, backed up by price stability agreements, price monitoring and reporting to the public.

He described Malta’s communication strategy as “ambitious” and insisted that it was greatly needed. Mr Jijakli said public opinion surveys in the new member states showed that the public would like to be well-informed before the euro introduction and that most were familiar with the target day and the euro banknotes and coins.

“Citizens in the new member states prefer information campaigns conducted by the media and that focused on the practical implications of the euro. Citizens want the dual display of prices and are aware of the positive consequences of the introduction of the euro,” Mr Jijakli explained.

Next week, the Commission will be publishing an assessment of Malta’s the practical preparations for the changeover to the euro, he said.

During a question and answer session, the Parliament Secretary within the Finance Ministry, Tonio Fenech, explained the rationale behind the government’s decision to introduce dual display of prices on 1 January 2007 and insisted that the exercise was solely for information purposes and not to encourage retailers to start accepting the euro currency. He said the government was trying to dissuade people from using the currency before its introduction in 2008.

With regards to inflationary concerns, Mr Fenech said he was convinced that there would not be a lot of abuse when the euro becomes legal tender and that “there is no cause for concern”.

The parliamentary secretary also insisted that it was not true that retailers will have to change their cash registers – “unfortunately, there are those who still say so!”

In his presentation, the governor of the Central Bank outlined the reasons why the early adoption of the euro made economic sense and why the euro would be beneficial to small countries like Malta. Mr Bonello said that delaying entry would require the economy to surrender the benefits of the single currency and risk falling further behind other countries.

The master plan published yesterday looks at the various decisions taken by the government and the committee over the past six months and provides a roadmap of what the NECC’s strategy will be in the coming months.

The update covers issues such as the cash changeover strategy and financial services, the NECC’s communication strategy that will target specific groups in society, consumer protection, support for businesses, the euro changeover within the public sector, education and training, and the euro adoption bill which is currently being discussed in parliament. Another update will be published at the end of the year and another in mid-2007, the chairman of the NECC, Joseph F.X. Zahra said.