11 July 2007
At an ECOFIN meeting in Brussels, the European Council yesterday decided to allow Cyprus and Malta to adopt the euro as their currency, thus enlarging the euro area to 15 member states, as from 1 January 2008.
In a statement issued yesterday, The European Commission welcomed the final and formal decision by the Ecofin Council today allowing Cyprus and Malta to adopt the euro as from 1 January 2008.
In the coming 5_ months, both countries will have to complete and finalise their crucial practical preparations to ensure that the changeover to the euro takes place smoothly, as was the case in Slovenia this year.
“I am happy that Cyprus and Malta will adopt the euro bringing to 15 countries and nearly 320 million the number of people who share the currency that has the vocation to be, one day, the sole currency of the European Union”, said Joaquín Almunia, European Commissioner for Economic and Monetary Affairs. “Thanks to economic and monetary union, the euro area has now enjoyed an unprecedented period of price stability and low interest rates. But being part of a monetary union also implies an added responsibility vis à vis the other members; a responsibility to run sound public finances and to coordinate economic policies for the benefit of more growth and better jobs for all.”
The Council encouraged Cyprus and Malta to continue with appropriate policies to ensure that they can make the most of the benefits of joining the euro, in particular as regards budgetary rigour, structural reform and maintaining the competitiveness of their economies.
In previous notes on Malta’s convergence, the Council noted that it abrogated its 2004 decision on excessive deficit on 5th June 2005. It said that after peaking at around 10 per cent of gross domestic product in 2003, the budget deficit decreased significantly under Malta’s fiscal consolidation programme, reaching 2.6 per cent in 2006. It also commented that although the general government debt to GDP ratio is above the EU’s 60 per cent reference value, this is on a declining path and is expected to reach a figure of 66 per cent in 2007. The average HCIP inflation rate in Malta in the year ending March 2007 stood at 2.2 per cent, which is below the reference value for the price stability criterion.
Thirteen out of the EU’s 27 member states currently use the euro as their currency: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Austria, Slovenia and Finland. Euro notes and coins were introduced in 12 of those countries on 1 January 2002 and in Slovenia on 1 January 2007.
Production of the coins will start shortly at the Mint of Finland, for the Cyprus coins, and the French Mint (Maltese coins) as a result of public tenders. Euro coins bear a common and national side.