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Cyprus, Malta join euro currency zone

— PHOTO: Xinhua

NEW LEGAL TENDER: Cyprus President Tassos Papadopoulos shows new euro bank notes he just withdrew from an ATM in Nicosia on Tuesday.

NICOSIA (Cyprus): E.U. newcomers Cyprus and Malta adopted the euro on Tuesday, bringing to 15 the number of countries using the currency with increasing clout over the slumping U.S. dollar.

The Mediterranean islands, both former British colonies, scrapped the Cyprus pound and Maltese lira at midnight.

Maltese Prime Minister Lawrence Gonzi had to wait a little before getting his hands on the new currency. An automated teller machine did not work when Mr. Gonzi tried to withdraw euros, and he was obliged to use a different ATM.

“We are the smallest member state of the European Union, but we are proud,” he said.

Both countries welcomed the euro with outdoor celebrations, including a fireworks display in Malta’s rainy capital Valletta.

The euro has risen more than 11 per cent against the dollar during the year and nine East European countries are waiting to convert.

The euro’s strong exchange rate of $1.4599 on Monday — up 79 per cent from its lowest point of 82 cents in 2000 — has given more pocket power to European tourists in the United States, while curtailing the movements and spending of many American tourists and workers abroad.

“We are in a region that could have some geopolitical surprises,” Cyprus Finance Minister Michalis Sarris said.

“Although the pound has been a loyal and faithful servant of the Cyprus economy, we felt that things could happen that could destabilise a small open economy, so it was to your benefit to join the euro zone as soon as possible.”

Only the southern, Greek-speaking part of Cyprus will use the euro. The government in the north is recognised only by Turkey, but many Turkish Cypriot merchants will also accept euros along with Turkish lira.

Cyprus’ euro coins will be inscribed in both Greek and Turkish, with designs that include the mouflon or wild sheep, a national symbol. Malta’s 1 euro and 2 euros coins will bear the Maltese cross.

“We’re sorry to say goodbye to our pound but happy to welcome the euro,” Cyprus President Tassos Papadopoulos said moments after midnight on the island.

Combined, the economies of Cyprus and Malta account for less than 0.3 per cent of the euro zone’s gross domestic product. Both easily met the requirements for limiting deficits and inflation, but euro adoption has also brought public scepticism. A European Union poll found 74 per cent of Cypriots and 65 per cent of Maltese believe the euro will drive prices upward. The September survey also found 44 per cent of people in Cyprus and 33 per cent in Malta would be sorry to see their national currencies being replaced.

“This makes us complete Europeans,” Maltese hotel worker Mark Ferench said minutes after the celebrations started. “This is the culmination of our European Union membership.” — AP

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