Whatever the pros and cons of a unilateral adoption of the euro by Turkish Cypriots on the same day as it is formally adopted by the Republic of Cyprus controlled areas, the Turkish Cypriot economy needs serious structural reform. This was perhaps the only consensus that came out of a wide-ranging debate on Tuesday at a conference at the Turkish Cypriot Chamber of Commerce, in which the findings of a study by a bicommunal initiative group of economists was discussed.
The researchers — Praxoula Kyriacou, Stelios Orphanides, Yenal Surec and Vargin Varer — looked at the pros and cons of adopting the euro in the north.
At the risk of being too brief, the researchers argued that there could be important price stability effects of euro adoption and it could act as an important catalyst for reform, as well as economic and political integration. However, one had to conclude from the discussion that it was not guaranteed either way whether there would be net gains, given the economy’s links to the Turkish lira, structural problems and so on.
Adoption of the euro, while favoured by unions in the north and some in the business community, is not on the agenda of the Turkish Cypriot authorities.
Moreover, as Kyriacou pointed out at the end of the seminar, the point was to hold a bicommunal discussion about it, not necessarily to come up with firm conclusions.
However, this has not stopped the
The roundtable discussion on the same topic scheduled for Wednesday evening at 18.00 is no longer taking place at KEVE but will instead take place in the grand hall of the Pasydy building (just behind KEVE) at the same time.
The
The forthcoming euro adoption and the knowledge that it will circulate as widely in northern Cyprus as the Cyprus pound currently does, has sparked debate about whether it would be economically and politically beneficial to adopt the euro at the same time and whether it would promote integration.
While technically in the EU, northern
However, some have argued that it would be both a political gesture of good will and a good way of promoting economic integration with both the south and the EU if it were to adopt the euro at the same time.
Research suggests that exchange-rate fluctuations of the Turkish lira, the “official currency†in the north, is responsible for almost all of the high inflation rates in recent years.
Turkish Cypriot inflation hit double digits again in mid-2006 after a short-lived devaluation of the Turkish lira.
