END OF AN ERA: Last day for Cyprus pound transactions

Thursday is the last day for Cyprus pound trades with the Central Bank saying that some CYP 500 million worth of paper notes (EUR 854 mln) and about CYP 45 mln in coins have already been recalled.

About 1 bln worth of euro notes circulated into the Cyprus economy leading up to and after the adoption of the single European currency on January 1.

The CYP paper notes will be destroyed and the coins sold as scrap metal, ending an era that saw the adoption of the British currency in Colonial times that later became the national currency and saw the introduction of the decimal system with the thousand-unit mils in 1960 and the cents in 1983.

Finance Minister Michalis Sarris and Central Bank Governor Athanasios Orphanides said on Tuesday they were satisfied with the successful transition from the outgoing currency to the new one.

“We have done very well. It is remarkable how fast we made the transition and how fast the people of Cyprus became accustomed to the euro,” Orphanides said, adding that “we did not need to take contingency plans out of our drawers,”

Sarris said his Ministry had focused on ways to tackle various problems, such as red-tape delays, encouraging competition and announcing unjustified increases in prices.

“As time goes by, we will be able, apart from the transition to the euro, to mend other issues, which will help us work our economy better,” he added.

Sarris said he was certain that Cyprus‘ Eurozone membership would bring significant benefits for Cypriot households and businesses, and the sectors of technology, productivity and investment, which would lead to new jobs.

“Beyond this, our presence in the hardcore of Europe, our presence in the most important bodies of Europe, where the important decisions are taken and where all countries have an equal voice, is very important in general for the approach we maintain on our national cause. They will listen to us more carefully and the solution of the Cyprus problem will be accelerated,” he concluded.

 

— euro used almost exclusively

 

Michalis Sarris said on Monday that the Cyprus pound was fully withdrawn from circulation and that transactions in euros reached 95% of the total.

“Just a couple of days before double circulation ends, the euro is almost the exclusive currency of Cyprus, as regards consumers and businesspeople, especially in the large towns, but even in rural areas,” he pointed out.

Sarris said people have become accustomed to the euro, reaching “envious levels in absolute numbers compared to the experience of other countries that adopted the euro.”

He added that there has been a significant withdrawal of the Cyprus pound to an extent that it would be difficult to find the outgoing currency, and that the banks have already changed their pound deposits into euros.

Cypriot pounds will be convertible free of charge at banks and Co-ops until June 30. CYP coins will be convertible at the Central Bank for two more years until December 31, 2009 and CYP banknotes for ten years until December 31, 2017.

 

— Colonial pounds to Republic cents

 

The pound was first introduced in 1879, a year after Britain took the island as its colony. It was equal in value to the pound sterling until independence in 1960 and was initially divided into 20 shillings. However, unlike sterling, the shilling was divided into 9 piastres and the piastre into 40 para (like the Turkish kurush).

In 1955, Cyprus decimalized with 1000 mils to the pound, but the 5 mil coin was known as a “piastre” and the 50 mil coin as a “shilling”. The subdivision was changed to 100 cents to the pound in 1983 when the smallest coin of 5 mils was renamed as ½ cent, but abolished soon after.

The Cyprus national currency was replaced by the euro on January 1, 2008. The currency entered the Exchange Rate Mechanism II on May 2, 2005 and it was limited within the band of CYP 0.585274 ±15% per euro. A formal application to adopt the euro was submitted on February 13, 2007 and on May 16, 2007, Cyprus and Malta won the European Commission’s approval, a decision which was confirmed by the European Parliament on June 20, 2007 and the EU leaders on June 21, 2007.