Euro could be catalyst in Cyprus reunification

There may be profound implications to Cyprus’ accession to the EMU and adoption of the euro which go beyond the economic dimensions, according to Professor Andreas Theophanous, head of the Cyprus Centre for European and International Affairs.
Speaking at a two-day conference on “The Critical Function of History in Banking and Finance”, organised by the European Association for Banking and Financial History and hosted by the Bank of Cyprus, Prof. Theophanous spoke on “The Political Economy of Monetary Integration in the EU and Implications for Cyprus”.
He focused on the role and significance of the single currency and of the European Economic and Monetary Union (EMU) on the evolution of the EU.
He emphasised that the integration process has not reached the end of the road and argued that the EU would most likely intensify its efforts towards deeper economic and political integration even though this may take place without all member countries. Theophanous indicated that such a course of action would be necessary to sustain the euro as the currency of the Eurozone and also as a leading international reserve currency.
In addition to promoting fiscal prudence and facilitating the process of economic convergence with the members of the Eurozone, the euro, he argued, could prove to be the catalyst for new thinking in relation to the reunification of Cyprus. Within this framework he noted that the single currency and participation in the EMU make economic cooperation and coordination imperative. In this regard Theophanous stressed the need to consider the possibility of a paradigm shift from the bizonal bicommunal federal model to what he described as a “functional federal model” that would entail an integrationalist approach.