During this year, our country will be making its final preparations for the introduction of the euro, which should occur on New Year’s Day next year. The adoption of the euro will be another step forward towards assuring a stable economy for our country and an attraction for both foreign and local investment.
According to a report issued by the Central Bank of Malta, ‘Malta’s economy on the path to the euro’, the early adoption of the euro is a vital objective. Malta will benefit from more opportunities presented by the EU single market and replace all the costs and vulnerability that occur when managing a small national currency in a global market.
This would mean that Maltese businesses and economy would have another international tool to compete with their foreign counterparts and secure economic stability for our country.
The eurozone, which nowadays is made up of 13 countries, makes it comparable with major world economies such as the United States and Japan. Having a single currency and an economic and monetary union strengthens the European Union’s role in international fora and organisations like the International Monetary Fund, World Bank, and Organisation for Economic Cooperation and Development.
The euro’s strength is being recognised and given its due importance as an international investment and reserve currency. The euro has already become a major currency in which to borrow money: issues of international securities denominated in euro now rival dollar issues.
A single currency makes the European Union a strong partner to trade with and facilitates access to a genuine single market for foreign companies, who will benefit from lower costs of doing business in Europe.
Although the eurozone may be affected by developments that occur in global economy, this only affects minimally domestic prices since most of the products are produced or manufactured within the European Union.
The introduction of the euro back in 1 January 2002 has given a new dimension to the European Union. The monetary integration between the European Union states brought with simpler travelling with the euro area, direct comparison for pricing of goods and services and payments can be made with the same currency without any worries on exchange rates.
The exchange risks hinder competition across borders with the introduction of the euro these risks will be eliminated and investment decisions are much easier as fluctuations in the exchange rates can no longer influence the return on investment.
Malta’s response to the challenge of globalisation has been to promote higher manufacturing and service activities. The service industry orientation is in line with trends across the Euro area.
On 2 May 2005, the Maltese lira joined ERM II, the concept of fixed currency exchange rate margins. Since joining the net foreign assets of the Central Bank of Malta increased to e2.3bn, (September 2006) compared with the e1.9bn level at the time of entry in 2005. This is one of the positive effects already visible since the intelligent Maltese government took the right decision for the improvement of our economy.
Associating ourselves with a macro economy such as the eurozone we are assuring further economic security and competitiveness in the international market as well as attracting foreign investors towards our shores. Investors that apart from solidifying our economy create jobs and generate money circulation in our country.
The Nationalist Party believes that our country has the potential to compete in foreign markets. Not only does our geographical position attract investors but also the workers abilities and professionalism offered by the human resources in our country.
That is why the Maltese government led by Dr Lawrence Gonzi continued investing and improving in education and its facilities. Our main resource must be nurtured so that it may develop all the necessary skills and benefit from them. We, the Nationalist Party, believe in the potential of the Maltese people and that is why we invest to empower our society. An investment to improve our country, our children and ourselves so that we may guarantee a prosperous future.
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David Casa is a Nationalist MEP