On the eve of the euro

In the past few months, Malta has further refined and completed its practical changeover preparations and seems well prepared for the introduction of the euro. With a view to enabling businesses to give change exclusively in euro as from €-day, particular attention should be paid to ensuring an appropriate level of sub-frontloading.

The comprehensive communication activities on the euro should be continued so as to further increase the support for the euro.

According to Central Bank of Malta (CBM) estimates, 41.5 million euro banknotes (worth €799 million) and 140 million euro coins (worth €39.3 million) are necessary to replace the currency in circulation in Maltese lira. The CBM borrowed the necessary volumes of euro banknotes from the Banca d'Italia.

The Maltese euro coins were produced by the Monnaie de Paris and arrived in Malta between mid- September and the end of October.

Frontloading of euro cash to commercial banks started on September 15. In total, about 92 per cent of the banknotes which will be introduced into the Maltese economy (38.4 million banknotes, worth €749 million) and about 71 per cent of the euro coins (99.1 million coins, worth €27.81 million) will be supplied to the 107 bank branches throughout the country before €- day.

According to CBM estimates, 4.5 per cent of the banknotes to be introduced and 19.5 per cent of the coins will be supplied to businesses before €-day by their banks under sub-frontloading agreements. These estimates include 33,000 starter-kits for businesses (worth €131 each) and 330,000 mini kits for citizens (worth €11.6) which will be available at banks this week.

Around 60 per cent of all ATMs (154 in total) will dispense low denomination (mainly €10 and €20) euro banknotes from January 1 right after midnight. By noon on the same day between 85 and 90 per cent of ATMs will issue euro banknotes, while the remaining ATMs will be converted by 4 p.m.

On average, all ATMs serve for 306,000 withdrawals per week, with an average total value of €26.5 million.

Banks will be open on December 31 and closed on January 1. On January 2 and 3, they will only handle over-the-counter business with the public for cash deposits, foreign currency exchange and exchanges into euro. On January 4 and 5 the normal banking hours will be extended until 4 p.m. During the extended hours only cash deposits, foreign currency exchange and exchanges into euro will be handled.

About 12 million cheques are being used in Malta per year. Cheques issued in Maltese lira dated before January 1, will be accepted for payment for the normal validity period of six months from the date of issue, unless a shorter period is indicated. Cheques drawn on Maltese lira denominated accounts and issued in euro before January 1, will be honoured by commercial banks if presented after that date.

According to the latest Eurobarometer survey, about two-thirds of the Maltese population (65 per cent) still fear price increases on the occasion of the changeover to the euro, and 76 per cent even expect price abuses.

In order to address these fears, the National Euro Changeover Committee continues to implement a comprehensive set of measures. The dual display of prices in Maltese lira and in euro became mandatory on July 11, and will continue to be mandatory until June 30.

The FAIR initiative, under which more than 6,500 businesses (representing about 80 per cent 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, was complemented by Price Stability Agreements, which the NECC concluded with a number of importers, distributors and manufacturers in August and September.

Under these agreements the businesses promised to keep the prices for a wide range of products and services stable during a certain time before and after the changeover.

The price monitoring currently implemented by the Maltese authorities remains crucial to assess price developments and to inform consumers, and should continue throughout 2008 when the FAIR initiative and the dual display of prices will come to an end.