The European Commission yesterday adopted the sixth report on the practical preparations for the enlargement of the euro area, focusing on Cyprus and Malta which will adopt the euro in January 2008.
Its report revealed that while Malta was said to have further refined and completed its practical preparations and seems well prepared for the euro, two-thirds of the population are fearing price increases once the country adopts the euro.
With only five weeks to go before the adoption of the euro by Cyprus and Malta, the Commission made a final assessment of the state of practical preparations for the currency changeover in both countries. The Commission concluded that both Member States are well prepared for the introduction of the euro.
“Malta and Cyprus will adopt the euro in January 2008, less than four years after they joined the EU. This is something the Cypriot and Maltese people can be proud of because they will become part of the largest monetary area of the developed world, which has delivered an unprecedented period of price stability and favourable financing conditions for businesses and households alike”, said Joaquín Almunia, European Commissioner for Economic and Monetary Affairs.
“They must embrace this important step with confidence, but also with their eyes wide open to make sure that they are fully familiar with the new currency and to detect, and challenge, any abuse. Public authorities must also be careful and pursue policies that continue to deliver economic stability as a precondition for sustained growth and job creation.”
Frontloading of euro cash to Maltese banks started mid-September after the Central Bank of Malta received the coins ordered from the Monnaie de Paris, the French mint.
According to estimates of the central bank, 41.51 million euro banknotes (worth €799 million) and 140 million euro coins (worth €39.29 million) are necessary to replace the Maltese lira. Malta had a population of 407,810 at the beginning of 2007.
About 92.5% of the banknotes which will be introduced in the Maltese economy and about 71% of the euro coins will be supplied to banks before January. 33,000 starter kits for businesses (worth €131 each) and 330,000 mini kits for citizens (worth €11.65) will be available at banks as from the beginning of December 2007.
While enterprises appear well prepared, still about two-thirds of the Maltese population (65%) also fear price increases on the occasion of the changeover.
The Commission said the Maltese authorities continued to implement a comprehensive set of measures to address those fears. Those include the FAIR price initiative, under which more than 6,500 businesses (representing about 80% of the retail outlets) have committed not to increase the prices of goods and services “for the reason that a monetary changeover is taking place”. This is complemented by Price Stability Agreements which were concluded with major importers and manufacturers.