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EU newcomers Cyprus, Malta adopt the euro

Cypriot President Tassos Papadopoulos holds the euro bills he withdrew from an Automated Teller Machine during a Finance Ministry ceremony in Nicosia, Cyprus, early yesterday, when the east Mediterranean island formally adopted the euro as its official currency. PHOTO: AP

EU newcomers Cyprus and Malta adopted the euro yesterday, bringing to 15 the number of countries using the currency with increasing clout over the slumping US dollar.

The Mediterranean islands, both former British colonies, scrapped the Cyprus pound and Maltese lira at midnight.

The Prime Minister of Malta Lawrence Gonzi had to wait a little before getting his hands on the new currency. An automated teller machine did not work when Gonzi tried to withdraw euros, and he was obliged to use a different ATM.

"We are the smallest member state of the European Union, but we are proud," he said.

Both countries welcomed the euro with outdoor celebrations, including a fireworks display in Malta's rainy capital Valletta.

The euro has risen more than 11 percent against the dollar during the year and nine East European countries are waiting to convert.

The euro's strong exchange rate of US$1.4599 on Monday -- up 79 percent from its lowest point of US$0.82 in 2000 -- has given more pocket power to European tourists in the US, while curtailing the movements and spending of many American tourists and workers abroad.

"We are in a region that could have some geopolitical surprises," Cyprus Finance Minister Michalis Sarris said.

"Although the pound has been a loyal and faithful servant of the Cyprus economy, we felt that things could happen that could destabilize a small open economy, so it was to our benefit to join the euro zone as soon as possible."

Only the southern, Greek-speaking part of Cyprus will use the euro. The government in the north is recognized only by Turkey, but many Turkish Cypriot merchants will also accept euros along with Turkish lira.

Cyprus' euro coins will be inscribed in both Greek and Turkish, with designs that include the mouflon, or wild sheep, a national symbol. Malta's 1 euro and 2 euro coins will bear the Maltese cross.

"We're sorry to say goodbye to our pound but happy to welcome the euro," Cyprus President Tassos Papadopoulos said moments after midnight on the island.

Combined, the economies of Cyprus and Malta account for less than 0.3 percent of the euro zone's gross domestic product. Both easily met the requirements for limiting deficits and inflation, but euro adoption has also brought public skepticism.

A EU poll found 74 percent of Cypriots and 65 percent of Maltese believe the euro will drive prices upward. The September survey also found 44 percent of people in Cyprus and 33 percent in Malta would be sorry to see their national currencies being replaced.

"This makes us complete Europeans," Maltese hotel worker Mark Ferench said as the celebrations started. "This is the culmination of our European Union membership."

The 12 countries that have joined the EU since 2004 are obliged to convert to the euro eventually. Slovenia was the first to meet the targets and joined on Jan. 1 last year. 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.

Current members of the euro zone include Austria, Belgium, the Netherlands, Finland, France, Germany, Ireland, Italy, Luxembourg, Portugal, Spain, Greece and Slovenia.

New EU members Slovakia, Estonia, Latvia and Lithuania have joined the zone; others that have yet to adopt the euro are Bulgaria, Hungary, the Czech Republic, Poland and Romania.
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