Cyprus to have dual pricing for 6 months before euro

Government prepares business and public

The Cyprus government is gearing up the public for the introduction of the euro, with two announcements made by different bodies last week.

The Ministry of Commerce, Industry and Tourism announced on Friday the creation of a committee to prepare business and consumers for the adoption of the euro, due in January 2008.

The committee has been established with the participation of representatives from the Finance Ministry, the Central Bank of Cyprus, the Commercial Banks, employers’ representatives, trade unions, the Consumers’ Association and other organisations.

As well as guiding companies and consumers in preparing for the euro, they will also have a role in checking for unjustifiable price hikes.

The Ministry of Finance and the Central Bank of Cyprus will introduce a code of conduct for the adoption of the euro.

The Ministry of Commerce has already committed to prepare manuals and guides for the business sector, consumers and retail trade by January 31, 2006.

Dual pricing for 6 months

After initially thinking about dual pricing in Cyprus pounds and euros for only one or two months, the government has gone for caution and will have dual pricing for 6 months

and the simultaneous circulation of both currencies for one month.

Finance Minister Michalis Sarris, faced with scepticism from the largest coalition partner AKEL, which wants to delay the adoption of the euro, was at pains to point out the advantages.

He said that the introduction of the new currency would bring about lower interest rates, which would have a positive impact on household finances, housing costs and student loans.

The euro would also create better borrowing conditions in both the public and private sector.

Sarris added stated that the reduction of the exchange risk will be beneficial for small enterprises, the tourist industry and the investment activity.

“The state will be able to borrow with lower cost and will, therefore, have the opportunity to make huge development projects”, he added.