So on Jan 1, 2008, Cyprus transitioned to the Euro, replacing the Cyprus Pound. It was very interesting for a geek like me to watch the transition which was incredibly smooth.
There has been dual euro-pound pricing for a year now and merchants will accept both currencies for the next month. Most impressive is all the behind the scenes work that has transitioned all payment systems to a new system (including dual pricing for some time). As far as I have seen, there has have been no hiccups.
I am usually unimpressed by governmental performance in Cyprus but this is a great triumph for the Ministry of Finance and Central Bank. They successfully protected the Cypriot pound (initially through currency restrictions) after the Turkish invasion in 1974, kept it strong for 3 decades, started loosening restrictions in the 1990s, locked with the Euro in the late 1990s and have been harmonizing fiscal and monetary policy since. Central Bank lending rates have been on a decade long decline and as of two days ago the last 50 basis points (4.5% v. 4.0%) vs the ECB went away.
The currency administrators deserve kudos for avoiding a devaluation along the way and transitioning Cyprus into the Euro where the currency's fate is in larger and stronger hands. The current administration also deserves credit for managing inflation and even generating a fiscal surplus this year, something that other candidate members like Lithuania were not able to do and therefore missed the euro convergence date.
Finally, I watched a documentary on Cypriot coinage. As nostalgic as one might be for the 47 year Cypriot pound (it came into being after independence from the UK), it was the shortest-serving of the island's currencies, that have include the British Pound, Ottoman, Roman, Hellenistic, Byzantine, local and other currencies. The record holder is the Byzantine currency which was in use for an astounding 700 years. I will be surprised if the euro lasts that long.
Sorry for the geek-out on this, but i found it to be fascinating.
and Happy New Year!
