Cyprus ready to apply for euro adoption

Cyprus is ready to send its official application seeking entry into the euro-zone by January 1, 2008, said Finance Minister Michalis Sarris giving assurances that the satisfactory course of the economy will be maintained.

Sarris said the public should understand that euro adoption will have tremendous benefits for the economy and the country in general, stressing that the government will be vigilant to ensure that there is no profiteering during the changeover. Sarris was speaking during a luncheon hosted for publishers and media representatives to explain the timetable for euro entry.

“We shall submit our official application to European Commissioner Mr. Almounia as well as the Governor of the ECB,” said Sarris, confirming once again that Cyprus is ready and fulfils all the criteria for entry into the euro-zone.

Sarris said in March or April the Cyprus economy will be scrutinized by the Commission. By then Sarris hopes that the House will have voted through the last remaining bills concerning Cyprus’ euro–entry procedures.

Cyprus hopes to receive the green-light to join the euro-zone and lock the Cyprus pound with the euro sometime in June or July 2007.

Once the euro becomes legal tender in January 1, 2008, there will be one month of dual currency circulation in euros and Cyprus pounds for cash transactions, whereas all other transactions will be in euros.
Cyprus Central Bank Governor Christodoulos Christodoulou stressed that having met all the Maastricht requirements, there should no let up in the drive to bring state finances in order, adding that “we should make sure that our data remain sustainable as they are now.”
Inflation during 2006 was 2.2% compared to 2.9% the Maastricht threshold. The Cyprus pound is 1.05% above the central parity rate of 0.5852 or 1.7094 that was defined in May 2005 while the long term interest rates are 4.13% compared to 6.24% the EU average.
Christodoulou also stressed that there will be no devaluation to the Cyprus pound in the run up to euro adoption.

“We are in the pleasant situation of trying to keep the Cyprus pound from breaking higher, backed by record influx of foreign exchange, which during the first ten months of 2006 reached the equivalent of CYP 600 mln, up from CYP 560 mln for the whole of 2005,” said Christodoulou.

He added that a lot has happened and will happen as the authorities intensify efforts to explain to the public the various aspects related to euro introduction.

“We have held seminars for bankers, insurers, accountants, investors and teachers with up to 10.000 persons having participated in our seminars,” said Christodoulou, explaining that the 400-500 person gatherings in turn help spread the message as to how beneficial the euro will be.