With literally only few days left until euro adoption, a flurry of activity has been underway within both the business community, as well as society at large. Indeed, such interest and dedication to preparation augurs well for a successful and smooth changeover.
However, while most remaining issues are highly practical in nature, an interesting “forward looking” trend has also emerged with many questions relating to the future “management” of our new currency being put to the National Euro Changeover Committee. In essence, many people want to know: how will our money – the euro – be managed, considering that it is also the national currency of another 14 European Union member states?
Such questions may seem to be rather distant and theoretical, but in reality, money management ultimately affects us all – businesses and consumers alike – and it is in our interest to explore how, and why, this happens.
Common ‘European’ side…
Considering the fact that the euro is the single currency of an ever-increasing number of EU member states, it stands to reason that a particular ‘model’ for managing the single currency became a necessity. This need resulted in the creation of the ‘euro system’, which encompasses the European Central Bank and the National Central Banks of those countries that have adopted the euro.
Therefore, although ultimate responsibility for decisions relating to the management of the euro is “given” to the European Central Bank (ECB), there remains a high degree of cooperation between all National Central Banks within the Euro Area.
On one side of the “coin”, so to speak, we have the European Central Bank itself, which is responsible for “monetary policy”, meaning that the ECB spearheads decisions relating to the management of the euro, in all its forms. This includes the amount of euro notes and coins in circulation.
The European Central Bank is also responsible for ensuring low and sustainable interest rates (the cost of borrowing or lending money) and for the maintenance of low inflation by keeping prices stable in the long run. Ultimately, this results in creating greater consumer confidence in the stability, strength and purchasing power of their currency – the euro.
In addition to this, the European Central Bank is committed to supporting the economic policy decisions made and implemented by EU member states, providing that such policies do not hamper the stability of the euro.
‘National’ side…
On the other side of the coin we have the National Central Banks, which will include the Central Bank of Malta as from 1 January 2008. As part of the Euro System, the Central Bank of Malta will retain its ability to participate in the formulation of Monetary Policy – it will have a strong and valid voice within the euro area.
It is also important to bear in mind that while such institutions may often appear rather “distant” to the individual consumer or business, these institutions work tirelessly to ensure a sound and stable economic setting for the benefit of all.
To this effect, National Central Banks, as well as the European Central Bank give great importance to ‘credibility, trust, transparency and accountability’. However, we would do well to bear in mind that these institutions are accessible and are ready to offer information and assistance where required, through direct communication with all citizens.
One particularly interesting role played by both the European Central Bank and the National Central Banks revolves around the issue of counterfeit notes and coins. All institutions within the Euro System, as well as commercial banks and their clients, have an important role to play when it comes to rooting out fake notes and coins from circulation.
However, this is another topic in its own right, which will be discussed in detail next week. In the meantime, the national euro helpline – Linja Ewro 154 – as well as the various Euro Centres around Malta and Gozo, are more than willing to deal with your queries in order to make this transition as smooth and beneficial as possible.
2 European Central Bank website: http://www.ecb.int/ecb/orga/escb/html/mission_eurosys.en.htm
Claire Azzopardi is National Euro Changeover Committee
information officer