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Euro adoption celebrated in Cyprus

Cyprus welcomed the year 2008 by embracing the euro as its new legal tender, a step President Tassos Papadopoulos described as “the crown of Cyprus’ European identity”.

“If our accession to the European Union is rightly considered as a great achievement, our entry to the euro zone and the adoption of the euro, can be justifiably described as an even greater deed,” Papadopoulos said at a celebration ceremony marking the adoption here at midnight. The president cut a cake and withdrew brand new euro bank notes from an ATM at the country’s Finance Ministry. This New Year’s day “marks not only the beginning of a new year but also the start of a new era for Cyprus, a hopeful era for the Cypriot citizen, the European Cypriot citizen,” he added. Papadopoulos told the crowd that the introduction of the euro is not simply a change of national currency. “It is in essence a change of the way of life, the crown of our European identity, the culmination of a correct fiscal policy, which we have followed with consistency and responsibility over the past few years,” he said.

Cyprus joined the European Union in May 2004 as one of the smallest economies in the euro zone, contributing 0.17% to the area’s Gross Domestic Product and 0.24% to its population. In 2006, Cyprus’ per capita GDP was 92% of the EU average. Papadopoulos, who will run for a second term in presidential elections in February, said the introduction of the euro would have a positive fallout in efforts to reunite the divided islands, with the northern part of Turkish Cypriots still using Turkish Lira. “We are optimistic that the adoption of the euro will create more favorable conditions leading to a solution that will actually reunite Cyprus, its economy, territory, institutions and society at large,” he said earlier. About 7130 businesses, including large retailers and banks, are participating in a fair pricing code, launched by the government in July 2007. Meanwhile, the dual pricing system since last September will continue until Sept. 30, 2008, to enable the public to get used to the conversion rate and more importantly, to observe any abnormal price increase. However, many ordinary Cypriots are still worried about possible price hikes as in some other EU countries when they adopted the single currency.

Cypriot officials have vowed to shame those who try to make illegal profits from euro adoption by publishing a list of their names on a weekly basis. Under the decision adopted by EU finance ministers earlier this year, the exchange rate will be 0.585274 Cyprus pound to 1 euro. The Cyprus pound will remain legal tender until the end of January but all changes will be given in euro when paying with the old currency. All banks in Cyprus are obliged to exchange pounds for euros free of charge until June 30, although the Central Bank will accept Cyprus pound notes until 2017 and coins until the end of 2009. It is estimated that most Cyprus pounds will be out of circulation within the first 15 days of 2008. The old pound notes will be shredded while the coins melted for scrap metal. The adoption of the euro by Cyprus and Malta, two island states of the EU, brought the number of euro zone members to 15, with an estimated population of 318 million.

Britain, along with Denmark, have opted to stay out of the euro zone for the time being. However, two British military bases retained in southern Cyprus will embrace the single currency on Jan. 1, ahead of their euro-skeptical countrymen at home. (