It had been widely anticipated that as the date of the changeover from the Maltese lira to the euro approached, many Maltese who had been keeping their money at home instead of at the banks would have started offloading it by converting it into the currency that would soon become Malta’s legal tender.

But what was perhaps unexpected was that this dehoarding process would have started as early as it has, over a year before the actual changeover is scheduled to take place, and at an unnecessary cost as well. The costs arise from the fees Malta’s banks levy on foreign currency exchanges – and the euro is to be treated strictly as a foreign currency until midnight on 1 January.

The fact that hoarded money had already started coming out of the woodwork at the end of 2005 is not surprising in itself, but what is surprising is the sheer volume of hoarded cash involved. Over the last 14 months or so, between Lm35 million and Lm38 million have made their way back to the Central Bank as those hoarding what will soon become Malta’s legacy currency began contemplating the changeover. That works out to nearly Lm100 per capita.

Central Bank Governor Michael C. Bonello thought it fit to speak about the matter when he addressed a National Euro Changeover Committee plenary session earlier this week, also saying that most of the money, some Lm25 million, that has found its way back to the bank was mainly in the form of Lm20 notes, while about another Lm10 million in Lm10 notes have also been returned.

He also sounded a note of warning over the practice, stressing there is no real need to rush into exchanging money, mostly because the people doing so prematurely stand to lose part of their savings through levies being charged by banks.

What is perhaps more worrying is the fact that other exchanges are being carried out in the streets. Such transactions are far more risky in the sense that people are being charged more for such an “illegal activity”, while at the same time they are also exposing themselves to the risk of being given counterfeit euro notes at a time before the NECC’s main anti-counterfeit communications campaign gets off the ground.

Mr Bonello insisted that such practices, whether through the banks or on the streets, are premature and wholly unnecessary – an insistence that we feel we must agree with.

First of all, there is, as yet, no confirmation that the European Commission will approve Malta’s bid to switch to the euro, although the most recent indications show that the country will be meeting the established criteria for it to be given the green light for the euro transition on 1 January. We will know more after the European Commission and the European Central Bank analyse Malta’s application to join the eurozone.

Secondly, many people seem to have not realised that by exchanging their money now, they are losing part of it in bank charges. With large amounts – and Mr Bonello said individuals have turned up at banks carrying Lm10,000 sacks of cash – the fees charged by the banks become quite substantial.

The people should be told over and over again that there will come a time – once the dual circulation period starts – when the banks will be obliged to carry out such transactions free of charge, and therefore the people should be encouraged to wait until that time comes. Added to this, it should be made clear that the Central Bank will continue to exchange Maltese lira notes for up to 10 years after the changeover, and coins for two years following the event.

Perhaps the NECC, which has mounted a public information campaign on the changeover, should apply a better focus more on such practical issues.

No doubt, the NECC information campaign is reaching far and wide and the closer the euro adoption date draws, the more it should step up its work in this regard. Still, from this particular issue it seems that the people are still failing to fully understand what they have to do and how things will work.