Cyprus and Malta adopt the euro

http://news.yahoo.com/s/ap/20071231/ap_on_bi_ge/cyprus_malta_euro_3

By Menelaos Hadjicostis
Associated Press
via Yahoo News
Monday, December 31, 2007

NICOSIA, Cyprus -- EU newcomers Cyprus and Malta adopted the euro Tuesday, tying two tiny countries on the edge of Europe to its core institutions -- but raising consumer fears of higher prices.

The Mediterranean islands, both former British colonies, scrapped the Cyprus pound and Maltese lira to bring the number of countries using the shared currency to 15.

At midnight, Cyprus President Tassos Papadopoulos cut a new year's cake at the Finance Ministry, starting celebrations in the capital Nicosia. Malta was to officially welcome the euro an hour later at 2300 GMT.

"We're sorry to say goodbye to our pound but happy to welcome the euro," Papadopoulos said.

Facing a close election in February, Papadopoulos said adopting the shared currency could help break a 33-year-old stalemate over reuniting the island. Cyprus is divided into a Greek Cypriot-controlled south which joined the EU in 2004, and a Turkish-controlled north, which is not recognized internationally.

Cyprus' euro coins will be inscribed in both Greek and Turkish, with designs that include the mouflon or wild sheep, a national symbol of the island which thrives in the United Nations-patrolled buffer zone. Malta's 1 euro and 2 euros coins will bear the Maltese cross.

"It's an historic day for Cyprus," Cyprus Central Bank Governor Athanassios Orphanides said. "The euro gives us the opportunity, making the right choices, to improve the standard of living for all our citizens."

Combined, the economies of Cyprus and Malta account for less than 0.3 percent of the euro zone's gross domestic product.

Relatively prosperous Cyprus and Malta regard the arrival of the euro as a political achievement linking them more closely to the EU, despite public skepticism about the economic benefit of the currency change.

A European Union poll in September found 74 percent of Cypriots and 65 percent of Maltese believe the euro will cause an increase in prices.

In Malta's capital Valletta, supermarket shopper Margareth Dalia said she was not worried about the changeover.

"We'll get used to it very quickly as we got used to them before from (British) sterling to the Maltese liras, now from the Maltese to the Euro," she said. "I don't think it will be difficult."

The 12 countries which have joined the EU since 2004 are obliged to eventually join the euro. Slovenia was the first to meet the targets and joined on Jan. 1, 2007. Of the nine remaining countries, only four have linked their currencies to the euro in an exchange rate trading band, a key step toward membership.

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