It has been announced that agreement has been reached on when dual display of pricing will be mandatory in the run up towards Malta's adoption of the euro. dual display of pricing implies that goods and services will be priced in both the Maltese currency and the euro. Disagreement had been expressed by the private sector as to the date when such dual display of pricing would become mandatory, as the government had initially proposed January 1, 2007, a date which the private sector had judged to be too soon. The eventual date decided upon is July 1, 2007, six months before Malta's expected adoption of the euro.
The issue of dual display of pricing has been a hot one also in the countries that have adopted the euro before us. Consumer associations have judged dual display of pricing to be one way of making it difficult for producers to raise prices unnecessarily at the time of the changeover. The experience of such countries does teach us that dual display of pricing is not just desirable but necessary prior to the adoption of the euro.
On the other hand, retailers and distributors have not been too keen on dual display of pricing because it involves more work and additional administrative costs. This is also a very valid point, especially in the case of products that we buy infrequently, the prices of which would therefore be very difficult to control.
Essentially, dual display of pricing is required by consumers to get used to think in euros in the shortest time possible. The six months during which dual display of pricing shall be mandatory, consumers shall be required to think in terms of two distinct currencies, for which there is a fixed rate of exchange. It is the same type of experience that we go through whenever we travel.
At a certain point in time, the Malta lira will disappear as the euro becomes our national currency. The concept of a rate of exchange between the two currencies stops being relevant. Thus the quicker we manage to build in consumers' minds an automatic trigger that helps them to think exclusively in euros, the less painful the changeover will be.
In fact this is why it is critical that it becomes widely acceptable that the concept of a rate of exchange between the two currencies becomes irrelevant. There would always be a natural tendency to think of prices in Maltese liri, even after the changeover date of January 1, 2008. Thus if we are purchasing a product we would keep remembering what the price would have been like in Maltese liri, as that would be our benchmark. One of the results that dual display of pricing should be achieving is a change of the benchmark from the Maltese lira to the euro.
On this basis, it is necessary that dual display of pricing is adopted by anyone who is selling a good or service. There may be the tendency to insist on a display of dual display of pricing just in retail shops, especially grocers or pharmacies. The risk of abuse is far greater for infrequent purchases of goods and in the purchase of services. For example, if a purchase may involve also a service charge, then that service charge should be quoted in both Maltese liri and in euros. When it comes to services, like doctor's visits or the plumber's visit, it is equally necessary to quote both prices.
One possible way of helping consumers start using the euro as a benchmark is through a publicity campaign in the media showing dual process for certain goods and services. Thus, although retailers will not be obliged to display dual display of pricing for another year, consumers will already be geared up mentally to use the euro as their benchmark. In order to address the issue of abuse, we would require a comparative study using as a baseline today's prices. This would enable government to assess the extent to which prices may or may not have changed when dual display of pricing becomes mandatory.
dual display of pricing is most definitely a good tool. The fact that agreement has been reached with the private sector as to when this will be implemented is a good sign. The government should continue to provide extensive information as it is doing today. However, the private sector should seek to do its best to eliminate abuse. Moreover, it would be to everyone's benefit if, during the dual display of pricing process, the euro becomes our benchmark.
Thinking in euros rather than in Maltese liri helps the changeover process a great deal.