As the clock struck midnight, Cyprus and Malta scrapped Cypriot Pound and Maltese Lira respectively. These two nations become the latest entrants in the euro-zone.
With these two EU newcomers adopting Euro, the number of nations in which the currency is used increases to fifteen. Also the two nations acquire a say in determining European Central Bank Policy. Cyprus’ President Tassos Papadoupoulos said in a ceremony marking the transition to the new currency:
We’re sorry to say goodbye to the pound but it’s with joy that we welcome the euro. Happy new year with a happy new currency.
However, the Turkish Lira will remain the currency in northern Cyprus, which lies outside the EU.
The occasion was marked with hundreds of people lining up in the streets of Nicosia and Valletta. Fireworks and music marked the event as the old currencies were disbanded in favor of euro.
The Mediterranean islands are two of the smallest members of EU and had been preparing for a long time for the adoption of new currency. They had reduced budget deficits and borrowing costs to usher in euro.
There has never been a bad time to jump on the euro bandwagon; the currency has climbed in all barring one of the past six years, currently it accounts for 26.4 per cent of global forex reserves. However, adoption of euro is more propitious at present. The currency rose more than 11 per cent against a steadily weakening dollar during last year. This means EU citizens enjoy considerable purchasing power in the States. It is no surprise that nine other nations are in line, waiting for their turns to embrace euro.
Combined economies of Malta and Cyprus are insignificant contributors to the euro-zone’s GDP; it is, however, the membership to coveted ECB that holds more importance for the small nations. Also the common currency essentially means more foreign investment, increased growth rates due to better integration, and of course, more stability economically.
