One year with the euro and lira is still not far from mind

A year after Malta adopted the euro, people are slowly warming up to the young currency even though many can still only make sense of it in comparison with the good old lira.

Most people who were approached in Valletta said it took them a while to get used to the fact that prices in euro initially looked "scarily expensive". One year on, that factor still lingers but people are learning to expect big numbers.

"When you see something that costs €100, you're initially shocked but then realise it's not that much," said Katya D'Amato, 15. Still, overall, she doesn't think getting used to the euro was so complicated.

Her friends, Josianne Block and Kelly Peplow, agree but still convert to the lira sometimes.

Similarly Carmen Grioli, 47, finds that the euro can be tricky: "When you withdraw €50 it feels like you have a lot of money when it's not really much. Now I'm used to it, though."

But this type of confusion is normal since any currency changeover comes with a psychological impact, explains economic analyst John Cassar White.

"The hangover following the loss of our old national currency will remain for some more time," he said, adding that some may believe the changeover led to an increased cost of living and inflation. "It may have contributed but I think it was not major," he said.

Consolata Caruana, 61, and her husband Luis, 65, did not really think life became more expensive following euro adoption although some shops did round up prices.

Like them, Mario Salerno and his wife Carmeline did not see an increase in the cost of living and were "slowly" getting used to thinking in euro. However, Josephine Mifsud Perini, 69, found that things did become more costly, and her 70-year-old husband, Joseph, found it difficult to tell as he needed more practice with the currency. He liked the fact that he could compare prices with foreign ones thanks to the euro.

Alfred Perini, 63, said he was glad Malta joined the euro and questioned what the lira would have done in the economic crisis.

On this matter, Mr Cassar White said: "The lira stood the test of time and was tied to a basket of stable currencies. Having said that, it was a small currency of a very small nation in a very big world. So it is difficult to predict what could have happened had Malta not joined the eurozone".

"We have to respect the record that the lira had in our past but it is difficult to say what would have happened... I think we should welcome the fact that we are in the eurozone though it will not bring automatic benefits. We have to work for those benefits and ensure that our competitiveness remains sound and improves," Mr Cassar White added.

As he moved on to point out the pros and cons of joining the euro, he said that, on the plus side, belonging to the universally-recognised currency made Malta more attractive to investors. It was also easier for people to transact in the currency and membership of the European Central Bank gave a certain amount of guarantees in case banks needed support.

On the minus side, he said, the way monetory policy (movement in interest rates) was regulated by the ECB - according to the inflation situation in eurozone as a whole - could have different effects on different economies. In Malta, in particular, the inflation rate was persistently higher than that in eurozone area. Low interest rates, as altered by the ECB, may increase inflationary pressure, he explained.