Introduction to Euro

Conversion rate: € 0.585274

Cyprus is adopting the Euro (€) as from 1st January 2008

On Cyprus' entry to the euro area on January 1st, 2008 the euro will become the Republic's monetary unit. Thus the currency will be issued within the framework of the Eurosystem.

The euro is the common currency in 13 of the 27 member states of the European Union (EU). The euro was introduced on 1 January 1999, initially, as an accounting unit. Three years later, on 1 January 2002, euro banknotes and coins went into circulation in 12 member states of the EU, replacing their national currencies. The 12 countries that participated initially in the euro area are Austria, Belgium, Finland, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Portugal and Spain. On 1 January 2007, Slovenia joined the euro area, becoming the first new EU member state to adopt Europe's common currency.

Cyprus and the Euro

The adoption of the euro will bring considerable benefits for the Cypriot citizen. Price transparency in the single market of the EU facilitates price comparability, fosters competition and leads to lower prices. The elimination of the exchange rate risk is conducive to trade transactions, thus also leading to lower prices. Travelling and buying goods and services in the euro area countries is easier, because citizens will not have the hassle of changing currencies every time they cross a border, and are better able to compare prices since they can use their own currency anywhere in the euro area. Travelling and buying goods and services outside the euro area is also easier, since the euro is an international currency and therefore widely accepted in many places outside the euro area, particularly in tourist destinations. Furthermore, both savers and investors can take advantage of increased opportunities for savings and investment, which emerge in the single financial market of the EU.

Moreover, important potential benefits exist for the economy as a whole, such as price stability, sound public finances, low interest rates and a shield for negative shocks in the external environment. These conditions are conducive to bolstering economic growth, investment and employment, to the benefit of all citi10zens.

Time schedule towards transition

• Day of Translation lock
  In July 10, 2007 Cyprus pound was locked with the Euro at the rate of 0.585274. The irrecovable conversion rate is in use as from this date. All catalogues and price lists during the period 1st September 2007 to 31st December 2007 present double prices (ie in both Cyprus and Eur).
• Day of Implementation - Data conversion
  The Government of Cyprus decided to use for the conversion the 'bing-bang' approach in which all systems, procedures, documents, accounts, balances loans and deposits have to convert at midnight of new year 2008 to Euro (€).
• Parallel circulation of both Euro and Pound (January 2008)
  As from January 1st, accounting transactions will be quoted in Euro; bank transfers, cheques issues will be acceptable in Euro only. In the month of January there will be a parallel circulation of C£ and € cash currencies. All bank accounts and contracts will be automatically translated into € at the conversion rate.
  The company capital will be transferred to Euro. The balance payable/owned to VAT and Income Tax Authorities will be converted to € at the conversion rate.

Euro Historical Overview for Cyprus

On 1 May 2004 Cyprus became a full member of the European Union. The compliance with the acquis communaitare, which included among other things the liberalisation of the capital account, was accomplished very smoothly.

On 2 May 2005 the Cyprus pound joined ERM II, at the pre-existing central parity of CY£1=€1,7086 (€1=CY£ 0,585274) and at the pre-existing fluctuation margins of ± 15%.

On 10 July 2007 the EU Council of Finance Ministers approved Cyprus adoption of the euro as from 1 January 2008 and decided that the Cyprus pound exchange rate vis-a-vis the euro will be fixed at the central parity of €1=CY£ 0,585274. This decision was the result of Cyprus' commitment to a prudent exchange rate policy framework along with disciplined monetary and fiscal policies.

Hence, on January 1 2008 the Cyprus pound will be replaced by the euro as the legal tender money of Cyprus at the irrevocable fixed exchange rate €1=CY£ 0,585274.

Euro Symbol

The symbol chosen for the new currency (€) is inspired by the Greek letter "epsilon", which is the first letter of the word Europe (ancient Greek name found in Greek mythology). The two parallel lines indicate euro's stability. The official abbreviation for the new currency, which has also been registered with the International Standards Organization (ISO) is EUR and can be used in financial, commercial and business activities.