02/07/07 - Cyprus Prepares to Join the Euro

With the euro set to become the Cyprus' new currency on January 1 next year, how will we pay for the things that we take for granted on a daily basis in the days immediately after the changeover?

Will we need to rush out immediately and obtain the new notes and coins if we want to fill our cars with petrol or park on a metre? What if we simply want a nice, cold drink from the nearest vending machine?

The Finance Ministry explained that companies must be ready for the conversion by January 1. “There will be a period of one month where we will see dual circulation,” a spokeswoman explained. “However, by law, things such as parking metres and vending machines must be converted to accept euros immediately, as the Cyprus pound will no longer be the legal currency.”

“If companies expect consumers to look at them in a favourable light and want to keep up good brand recognition, they must be ready by January 1,” a source close to the Minister said.

Spokesman for the Association of Petrol Station Owners, Pambinos Charalambous, said that all petrol stations will have machines in place by January 1 that would be able to accept euros.

“Some will also accept the Cyprus pound for a one-month period,” he said.

Akis Lefkaritis, Director of the Petrolina chain, told the Sunday Mail that the company had already installed certain software and hardware into their machines in preparation for the changeover.

“We have also replaced some older machines with new ones utilising the latest technology,” he said.

The whole project has cost the company approximately �100,000. “We are ready,” Lefkaritis said.

Lanitis Bros. who distribute Coca-Cola, Sprite, Fanta, Schweppes, Heineken and Amstel on the island, also said there would be no delay.

Vending Machine Supervisor Christos Vasiliou explained that a meeting had been held with the Central Bank in order to discuss the particulars.

“We operate around 400 vending machines across the island and we will be implementing a slight technological change in order for them to accept euros,” he said.

Nicosia Municipality are in charge of 430 parking metres in the capital.

The Treasurer said the metres would be able to accept euros straight away on January 1 and would no longer accept the Cyprus pound.

“Parking metres will have a mechanism changed whereas pay and display machines in car parks will be changed all together,” he said. “The total cost of the project is over �100,000.”

Jenni Fernando, marketing manager of the Hermes Group, the Consortium running the island’s airports, explained that the new car parking payment machines recently installed at Larnaca were chosen with conversion to the euro in mind.

“At midnight on December 31, the machines will be converted to accept euros,” she said. “This is a very simple process, which just requires replacing one microchip in the machines, and restocking them with euros. Once converted, the machines will no longer accept the Cyprus pound.”

Michael Maratheftis, spokesman for the Louis Group said that slot machines in their ships’ casinos accept tokens, “therefore what will change is what the tokens are worth in terms of currency.”

At the moment, one token is worth 25 Cyprus cents. That will change to 25 euro cents.

“This is something that is already in place on our vessels sailing from many European destinations,” Maratheftis said.

According to the Bank of Cyprus Organisation and Methods Manager Dimitris Loucaides, from 6pm on December 31, the bank’s ATM machines will only be dispensing euros.

“In order to do this, the ATMs will need to be recalibrated with a change to their software. Additionally, the cassettes where currency is loaded into will need to be set to accept a new dimension of notes.”

He added that people underestimate the massive operation that the banks will have to take on successfully to carry out the change from the Cypriot pound to the euro.

“This really is a huge operation, there are so many things that need to be done. Bank systems have to be altered. Some counting machines for bank notes and coins have to be changed, others that are older will be replaced altogether. Something else that will be incredibly costly is the transportation of money to branches,” he said.

Loucaides explained the gravity of the operation by saying that 10,000 euros in coins weighed 150 kilos, while a total of 1.8 million in coins will be taken to BoC branches. This operation will require special attention, especially in relation to security and insurance issues.

“This is not all, there is also the cost of using both currencies for a period of about a month, as well as taking into account the issue of the old Cypriot coins that will have to be removed from the market. We will have to remove all coins and take them to the Central Bank where they will be destroyed,” he added.

Despite what seems to be an increasingly costly and time-consuming project, the island’s longest serving bank does not believe that it will be affected too much from the loss of income from the introduction of the euro.

Everybody seems to be ready then. Only time will tell whether the conversion will be as smooth as predicted.