Euro, a foreign currency until adoption - Central Bank

The Central Bank made it clear yesterday that the lira remained the only legal tender currency in Malta and would remain so until the euro was adopted.

"Until that time the euro is to be treated as a foreign currency like any other," the Bank said.

"It should also be kept in mind that the introduction of dual display of prices in euro and Maltese liri does not, in any way, imply that the euro has thereby obtained legal tender status in Malta.

"Neither does it mean that the public is being encouraged to effect transactions in euros rather than in Maltese liri, or to convert Maltese liri into euros ahead of the euro adoption.

"The dual display of prices is merely intended to serve as an information tool to enable consumers to familiarise themselves with the future currency," it said.

The Bank said that all lira holdings, whether held as cash or other financial assets would, upon the adoption of the euro and for a period beyond that date, be converted into euros at the established irrevocable exchange rate without bank charges.

Furthermore, Maltese liri notes would remain exchangeable into euros for a period of 10 years, while the Maltese lira and cent coins would remain exchangeable into euros for a period of two years after the adoption of the euro, the Bank said.

The government is aiming to adopt the euro on January 1, 2008. It has proposed to introduce dual display pricing a year earlier but this has aroused fierce opposition from the business sector that claims it is too early and will entail added costs.

It has been argued that dual pricing should only be implemented when an irrevocable exchange rate has been established - which will not happen before the middle of next year - to avoid the risk of confusing consumers with a different rate after that point.