Ecofin Grants Eurozone Access To Cyprus And Malta

by Ulrika Lomas, Tax-News.com, Brussels

12 July 2007

The European Commission has welcomed the final and formal decision by the Council of European Finance Ministers (Ecofin), allowing Cyprus and Malta to adopt the euro as from 1 January 2008.

Acting on a proposal by the Commission, the Council fixed at 0.585274 the rate at which the Cypriot pound will be converted into euro. The equivalent rate for the Maltese lira is 0.429300 for one euro.

In the coming 5½ months, both countries will have to complete and finalise their crucial practical preparations to ensure that the changeover to the euro takes place smoothly, as was the case in Slovenia earlier this year.

"I am happy that Cyprus and Malta will adopt the euro bringing to 15 countries and nearly 320 million the number of people who share the currency that has the vocation to be, one day, the sole currency of the European Union", stated Joaquín Almunia, European Commissioner for Economic and Monetary Affairs. "Thanks to economic and monetary union, the euro area has now enjoyed an unprecedented period of price stability and low interest rates. But being part of a monetary union also implies an added responsibility vis à vis the other members; a responsibility to run sound public finances and to coordinate economic policies for the benefit of more growth and better jobs for all."

Euro area average inflation has remained well-anchored around 2% since the mid 90s, and mortgage rates have converged from double-digit levels in some countries in the early 90s to around 5%. However, the EC urged both member states to "devote great attention" to the practical preparations needed over the coming months for adoption of the euro.

Production of the coins started shortly after Tuesday's Ecofin decision at the Mint of Finland, for the Cyprus coins, and the French Mint (for Maltese coins) as a result of public tenders.

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