Toespraak Eurocommissaris Barroso bij invoering van de euro door Cyprus (en)

SPEECH/08/24

José Manuel Durao Barroso

President of the European Commission

"A Day for Celebration and Congratulation"

Welcome to the Euro Celebration

Nicosia, 18 January 2008

[President Papadopoulos,]

Distinguished guests,

Ladies and gentlemen,

Let me begin by thanking you for inviting me to share in this celebration.

Joining the euro has placed Cyprus at the economic and political heart of Europe less than four years after joining the European Union.

Let us not lose sight of what a great achievement that is. The euro area is not an exclusive or elitist club. But it is a group whose members must meet rigorous criteria. In recommending Cyprus's acceptance, the Commission was absolutely confident that Cyprus had done so. I congratulate Cyprus.

Such a feat didn't happen by itself, of course. The adoption of the euro is a historic step crowning years of hard work, a firm commitment to sound economic policies and bold reform.

It is also an important step for Europe. Together with Malta's accession, which we celebrated last week, and last year that of Slovenia, it shows that the euro is truly the currency of the whole European Union.

EU Member States, with the exception of those which have opt-outs, should aspire to join the euro area and follow policies accordingly.

What is more, I look forward to all EU Member States adopting the euro when the time is right and they meet the necessary conditions. All of us, and our currency, are stronger in a globalised world when we are united.

The convergence criteria set in Maastricht are not there to enforce an elitist approach, but to make sure that the adoption of the single currency is beneficial both for the newcomers and those already sharing the euro.

Meeting the convergence criteria can be a long and difficult journey.

This was the case in the past and is still the case today. The Commission was as strict in assessing Cyprus's fulfilment of the convergence criteria as it was with earlier applicants and as it will be with future ones.

Cyprus fully deserves membership. And I am confident that your efforts will be fully rewarded economically.

Because the euro now has a track record of delivering lasting benefits to its members. We have satisfactory growth and rising employment - an increase of 4.3 million jobs between 2005 and 2007. Crucially, we have the greater economic stability which is so essential for sustainable growth in the future.

At a stroke, the euro eliminated entirely any exchange rate costs and risks in the euro area, crowning the biggest single market in the world. No-one should underestimate the advantages of this for both consumers and businesses.

The euro encourages cross-border trade and investment inside the euro area.

The euro is a strong and solid currency - more than a fifth of the world's official currency reserves are in euros.

It is a cushion against global economic shocks like the steep rise in oil prices or foreign monetary crises. This is an especially important advantage in a small, successful and open economy like Cyprus's.

The current turmoil in financial markets is a matter of concern. The EU is addressing this through a road map aimed notably at strengthening transparency and the effectiveness of regulation and supervision in financial markets. This is essential to help maximise protection for businesses and citizens in the long-term.

I believe the effects of this financial market turmoil would have been a lot worse before the euro and without the timely and appropriate response of the European central bank. This is especially true for the smaller Member States of the euro area.

The euro also brings significant and concrete advantages to Cyprus's citizens.

It has delivered low and stable inflation, which is a pre-condition for sustained and job-creating growth. In the early 1990s, some euro area countries were still suffering from double-digit inflation. Cyprus was burdened by a yo-yoing inflation rate throughout the 1980s and 1990s.

Thanks to the credible and effective policy carried out by the European central bank, those levels of inflation no longer exist, despite justified current concerns over rising oil and commodity prices.

This has direct consequences. For example, all those who want to buy a house will appreciate the fact that borrowing is now so cheap.

For consumers, the euro has also increased price transparency, which means lower prices, and has made travelling within the euro area much easier. This advantage is slowly extending to the whole world: it is now as simple and convenient to travel around the world with euros in your pocket as it is with US dollars.

But joining the euro is just the start of the process for Cyprus, not the end.

Being a member of the euro area is a responsibility. It requires the right ongoing economic policies, including a sound budgetary policy.

As the Commission recommended in its Strategic report for the Spring European Council, Cyprus, despite its strong performance, needs to implement further reforms with a view to improving fiscal sustainability.

It should also boost life-long learning and increase training and labour market opportunities for young people, so that all Cypriots can play a full role in Europe's knowledge economy of the future.

It is also important that everyone in Cyprus remains vigilant on unwarranted price increases linked to the changeover to the euro. Consumers must get their full share of the benefits the euro brings - they must not be hit in the pocket.

Like Cyprus, the euro area itself also has responsibilities. For example, I consider that we can still strengthen euro area governance and policy coordination, in the full respect of prerogatives of all those participating.

Ladies and gentlemen,

The euro area now stretches across the Mediterranean, from west to east, and up to the Arctic Circle. It covers 15 countries and nearly 320 million citizens. It is a strong, stable, world class currency that accounts for almost 15% of the world's GDP.

By joining the euro, Cyprus has said yes to stability, yes to growth and yes to hassle-free trade and travel for its businesses and citizens.

Congratulations to the Cypriot people

Thank you.