07 MAY 2003

Search all issues

powered by FreeFind

Send Your Feedback!

Central Bank not worried about use of Euro in retail outlets

Julian Manduca
With Malta on its way to becoming an EU member in May 2004, it is likely that more and more tourists will expect to be able to use the Euro when visiting Malta.
Since the introduction of the single currency the Maltese business community took to the idea of accepting the new currency instead of Maltese Liri.
Accepting foreign currency has long been the practice in Malta with most shops willing to accept either US dollars or pound Sterling usually at unfavourable exchange rates for purchasers.
The Euro has quickly become a favourite and indeed some travellers are not aware that the currency is not legal tender.
A spokesperson from the Central Bank of Malta told The Malta Financial and Business Times: "The fact that Malta is on its way to becoming a member of the EU implies that Malta has also made a commitment to participate in EMU and, of course, eventually adopt the euro as its currency.
"Malta has already aligned itself with some aspects of the EU Acquis in this respect as for example with the amendments to the Central Bank of Malta Act made in 2002.
"The amendments, for example, strengthened the Central Bank's independence and prohibited the financing of government deficits by the Bank. There are, of course, other important aspects that have to be taken into account before Malta can adopt the euro, such as of ensuring that the Maltese economy has achieved real convergence with that of the euro area and, of course, participation in ERM11. What has changed vis a vis the euro is that we are now certain that Malta will eventually have to adopt the euro and, as such, we can start planning for it."
Asked whether the Central Bank would encourage use of the Euro, the spokesperson said: "I don't think that it is a case for 'encouraging further use of the euro,' as the Maltese lira is still the only currency with legal tender status in Malta. The lira is not pegged directly to the euro and although the weighting of the euro in the Maltese lira exchange rate basket is as much as 70 per cent, the Maltese lira exchange rate still varies against the euro on a day to day basis."
Nevertheless, the use of the Euro is expected to increase and asked what would the reaction of the Central Bank be should this happen, the spokesperson said: "We are well aware that retail outlets accept the euro for purchases.
The Central Bank in fact facilitated this when it permitted the holding of up to Lm 20,000 in foreign currency accounts for the purpose of depositing currency acquired through trading.
"Retail businesses have always accepted foreign currency in exchange for purchases made by tourists and the fact that outlets now accept the euro more freely is certainly because now almost all foreign currency transactions take place in euro.
"The fact that volume of transactions taking place in euro in the Maltese Islands has been growing is not a source of concern. It is a natural consequence of the euro having been adopted as the single currency of 12 European countries."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Business Times, Newsworks Ltd, 2 Cali House, Vjal ir-Rihan, San Gwann SGN 02, Malta
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail