There is still Lm80.4 million in lira in circulation, out of the Lm262 million in circulation at the end of the year. This is made up of Lm67.5 million (€157.23 million) in notes and Lm12.9 million (€30.05 million) in coins.
The amount of cash held by the Maltese has almost halved in the run-up to the euro adoption, nudged by a government amnesty as well as aggressive campaigns by the banks to highlight investment opportunities.
But with the dual circulation period ended at the end of last month, the Maltese now only have six weeks left in which to exchange their money at the commercial banks. There is, however, a 10-year period during which notes can be exchanged at the Central Bank of Malta and two years for coins.
The executive head of National Euro Changeover Committee, Alan Camilleri, said that there were two different issues.
"The first is that there is still a percentage of that amount which is hoarded money and will can be exchanged until the end of March at banks and then at CBM).
"The second important element is the issue of currency loss. With the large share of tourism industry in Malta, there might be a significant amount of money which is simply lost and would never return to the CBM. This has been the case in other countries... In Ireland and Slovenia it amounted to 15 per cent. Our suspicion is that it will even be more in Malta," he said.
"The 'lost' currency would need to be stricken off the balance sheet of the CBM after a period of time. At the moment discussions are still ongoing as to when the CBM will do this."
The Parliamentary Secretary in the Finance Ministry Tonio Fenech, also felt that there could be a variety of reasons for the large amount of lira still out there, noting that some currency would clearly be lost and never recovered, while some could still be hoarded.
"People know that they have 10 years in which to trickle the money back into the economy and seem to have opted to do so. After March there is no option but to go to the Central Bank to exchange the cash, as commercial banks will be barred from doing so," he pointed out.
He also lamented that this money was not being put to better use.
"Potential growth in the economy is being lost as this money is merely put aside rather then invested or spent thus contributing to economic activity. It is a pity, but it is no change from the present situation," he said.
Peter Sant, the economic research officer at Bank of Valletta, was not surprised by the amount still in circulation, given the level at which Malta started.
"Malta has traditionally had over three to four times the amount of cash in circulation per capita compared to the EU average. This is similar to our Spanish, Greek and Portuguese counterparts. "We are very happy with the rate with which cash has been entering the banking system over the last few months. The Maltese euro changeover experience certainly compares very well with that of other eurozone countries. The Maltese public has shown enthusiasm for the new currency. In fact, in Malta we have exchanged more cash in a relatively short time when compared to Cyprus and Slovenia," Mr Sant said.
During the end of December 2007 and for all the month of January 2008, Bank of Valletta issued over €266 million through 755,418 transaction over the counter and through ATMs.
"Over the next month and a half, we are expecting the amount of Maltese lira notes and coins to continue entering the banking system smoothly. As part of the euro changeover process, we have seen a significant growth in bank deposits. We do encourage the public and the business community to continue depositing surplus funds into the banking system," he said.
"From an economic point of view, having funds hoarded is not healthy as these funds are not being used efficiently to finance new projects and attain a positive return for their owner.
"With our entry into the eurozone, the launch of the Single Euro Payments Area project and the launch of the national consultation on the Payments Services Directive, we would like to see a repositioning of both cash and cheques with the utilisation of modern means of payments, such as internet banking and cards. This would result in more cost savings in the economy and enhanced efficiency in our European payments industry translating into more economic growth."
The amount of cash held by the Maltese has almost halved in the run-up to the euro adoption, nudged by a government amnesty as well as aggressive campaigns by the banks to highlight investment opportunities.
But with the dual circulation period ended at the end of last month, the Maltese now only have six weeks left in which to exchange their money at the commercial banks. There is, however, a 10-year period during which notes can be exchanged at the Central Bank of Malta and two years for coins.
The executive head of National Euro Changeover Committee, Alan Camilleri, said that there were two different issues.
"The first is that there is still a percentage of that amount which is hoarded money and will can be exchanged until the end of March at banks and then at CBM).
"The second important element is the issue of currency loss. With the large share of tourism industry in Malta, there might be a significant amount of money which is simply lost and would never return to the CBM. This has been the case in other countries... In Ireland and Slovenia it amounted to 15 per cent. Our suspicion is that it will even be more in Malta," he said.
"The 'lost' currency would need to be stricken off the balance sheet of the CBM after a period of time. At the moment discussions are still ongoing as to when the CBM will do this."
The Parliamentary Secretary in the Finance Ministry Tonio Fenech, also felt that there could be a variety of reasons for the large amount of lira still out there, noting that some currency would clearly be lost and never recovered, while some could still be hoarded.
"People know that they have 10 years in which to trickle the money back into the economy and seem to have opted to do so. After March there is no option but to go to the Central Bank to exchange the cash, as commercial banks will be barred from doing so," he pointed out.
He also lamented that this money was not being put to better use.
"Potential growth in the economy is being lost as this money is merely put aside rather then invested or spent thus contributing to economic activity. It is a pity, but it is no change from the present situation," he said.
Peter Sant, the economic research officer at Bank of Valletta, was not surprised by the amount still in circulation, given the level at which Malta started.
"Malta has traditionally had over three to four times the amount of cash in circulation per capita compared to the EU average. This is similar to our Spanish, Greek and Portuguese counterparts. "We are very happy with the rate with which cash has been entering the banking system over the last few months. The Maltese euro changeover experience certainly compares very well with that of other eurozone countries. The Maltese public has shown enthusiasm for the new currency. In fact, in Malta we have exchanged more cash in a relatively short time when compared to Cyprus and Slovenia," Mr Sant said.
During the end of December 2007 and for all the month of January 2008, Bank of Valletta issued over €266 million through 755,418 transaction over the counter and through ATMs.
"Over the next month and a half, we are expecting the amount of Maltese lira notes and coins to continue entering the banking system smoothly. As part of the euro changeover process, we have seen a significant growth in bank deposits. We do encourage the public and the business community to continue depositing surplus funds into the banking system," he said.
"From an economic point of view, having funds hoarded is not healthy as these funds are not being used efficiently to finance new projects and attain a positive return for their owner.
"With our entry into the eurozone, the launch of the Single Euro Payments Area project and the launch of the national consultation on the Payments Services Directive, we would like to see a repositioning of both cash and cheques with the utilisation of modern means of payments, such as internet banking and cards. This would result in more cost savings in the economy and enhanced efficiency in our European payments industry translating into more economic growth."