Tuesday, January 1, 2008

The €uro becomes Malta's currency

It was a small step for many Maltese, a big step for the nation. The Prime Minister , the Governor of the Central Bank and scores of people withdrew the first euro notes from ATMs as Malta adopted the euro at midnight.

A simple operation in itself, it marked the end of an intensive 40-month period to make Malta eligible for adoption of the European currency. It also marked the proper beginning of Malta’s participation as the smallest country in the eurozone, with the Governor of the Central Bank having an equal voice as other governors in the European Central Bank.

Euro adoption was a requirement for Malta once it joined the EU in 2004, but the government had wanted Malta to join at the earliest possible opportunity. Slovenia became the first of the 2004 group of new EU member states to adopt the currency on January 1, 2007, with Malta and Cyprus now being the second and third.

It was not an easy process, with Malta having had to grapple with a high public deficit and inflationary pressures in order to achieve the Maastricht criteria for euro adoption.

A major yardstick was reached on May 2, 2005 when Malta was accepted in European Exchange Rate Mechanism (ERM II) and the Maltese lira was fixed with a central parity rate of MTL/EUR 0.429300. That rate remained unchanged and became the irrevocable exchange rate. Prior to that date, the value of the lira used to be calculated on the basis of weightings on a basket of currencies consisting of the US dollar, the Sterling and the euro.

That Malta has now adopted the European currency is a step “back into the future” for Malta since for many centuries it shared the currency of different nations. According to the website of the Central Bank, the first known coins introduced into the Maltese Islands were those of the Carthaginians who occupied the Islands from approximately the mid-sixth century BC. These coins remained the standard currency for about two centuries.

Following the Roman conquest of the Maltese Islands at the start of the Second Punic War in 218 BC., the Maltese Islands were allowed a limited measure of self-government and even minted their own coinage, not unlike the current situation where Malta had minted its own euro coins.

Towards the mid-first century BC coins based on Sicilian standards were struck in Malta.

After the first century BC there are no records to show that the Maltese Islands continued to mint their own coins. From this date on the coinage of Rome was used throughout the Empire.

After the fall of the Roman Empire, Malta was ruled in turn by the Byzantines, the Arabs, the Normans, the Swabians, Angevins, the Aragonese and Castilians. The coinage of these rulers was current in the Maltese Islands.

With the arrival of the Knights, the monetary system was adapted to that of Sicily and from time to time foreign coins, including Spanish Doubloons and Piastres, Venetian Zecchini, Livournine, Genovine and Louis d'Or were allowed to circulate with the local coinage, although this changed with time as the local mint was developed.

During the first 50 years of British rule, the legal circulating currency included the coins of the Knights, Spanish Doubloons and dollars, Sicilian Dollars, South American Dollars, French 5 Franc pieces and English coins.

In October 1855, a Proclamation declared Sterling to be the sole legal tender currency in Malta.

The Maltese Parliament in 1971 approved legislation for the decimalisation of the currency. In May 1972 a set of Maltese coins was issued to replace British coins. The Malta pound, which was renamed Maltese lira (Lm) in 1983, was retained as the currency unit.

This decimal set represented the first coinage issued by Malta as an independent nation and marked a new era in which Malta's own coins could circulate exclusively as the Island's sole legal tender coinage.

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