On 1 January 2008, Malta will adopt the euro as its national currency, and will officially join the eurozone.
Until that date, the Maltese lira (Lm) alone will be legal tender in Malta, and the status of the euro will remain that of a foreign currency.
The purpose of these Guidelines is to inform business operators and the general public of the implications of the euro changeover in relation to the issuing and encashment of local cheques.
All bank accounts that are denominated in Lm will remain so denominated until close of business on 31 December 2007, when all closing balances will be converted into euro at the irrevocably fixed conversion rate. The relative opening account balances on 1 January 2008 will be in euro.
It follows from this that holders of Lm accounts should continue to issue cheques in Lm up to the end of December 2007, but should start issuing cheques in euro as from 1 January 2008.
How will banks treat cheques issued in Lm prior to 1 January 2008, but presented for encashment after 31 December 2007?
Such cheques will be honoured if presented within the normally accepted validity periods (ie within six months from date of issue, unless a shorter validity period is specifically indicated on the cheque, in which case the shorter period will apply). Nevertheless, holders of such cheques are urged to encash/deposit them prior to 1 January 2008 if possible, or as soon as possible thereafter, in order to facilitate the changeover process.
The Lm amount will be converted into euro at the irrevocably fixed conversion rate, and the relative euro equivalent will be debited to the drawer’s account and paid to the presenter of the cheque. No commission or other banking charges will apply.
How will banks treat cheques issued in Lm after 31 December 2007?
Such cheques will be dishonoured.
How will banks treat cheques issued in euro prior to 1 January 2008 and drawn on accounts denominated in Lm?
Such cheques will be dishonoured if presented prior to 1 January 2008.
However, such cheques will be paid for their full value if presented after 31 December 2007. No charges will apply in such cases.
Naturally, cheques that are drawn in euro on local bank accounts that are also denominated in euro will be honoured, subject to the usual reserves, whether drawn and/or presented before 1 January 2008 or thereafter.
Such cheques should normally only be used to effect payments in Malta. If they are used abroad, they will take longer to process and may attract clearing and other administration charges. Likewise, cheques drawn in euro on foreign banks and presented locally will also take longer to process and may attract clearing and other charges.
Cheque books bearing the euro currency symbol will be provided to Lm account holders for use as from 1 January 2008, when balances on their Lm accounts will be converted into euro.
However, in the course of 2007, banks may also opt to issue cheque books with no currency symbol printed thereon. In this case, the account holder must fill in the appropriate currency symbol when writing out a cheque, ie “Lm” if a cheque is issued prior to 1 January 2008, and “e” if a cheque is issued after 31 December 2007.
Cheque forms bearing the Lm currency symbol and remaining in the account holders’ possession after 31 December 2007 could still be used to write out cheques in euro provided:
The printed Lm symbol is struck out and replaced by the euro currency symbol (e) and the amount in words also clearly denotes the euro as the currency in which the cheque is written, and that the account holder signs his full signature against these alterations.
Failure to comply with the above requirements will be sufficient reason for banks to dishonour the cheques concerned.