Malta’s experience in Economic and Monetary Union

On Tuesday 3 July, the Central Bank of Malta hosted a public lecture with the theme Ten years in Economic and Monetary Union – Malta’s experience.

The lecture was introduced by Dr Aaron G. Grech, the Bank’s Chief Economist. Rita Schembri, Head of the Bank’s Economic Analysis Department, recalled the main considerations leading to Malta’s adoption of the euro in 2008 and the factors that contributed to a smooth integration in the euro area.

A long history of investment and trading arrangements with euro area countries, the Association Agreement with the European Community signed on 5 December 1970 and which came into force on 1 April 1971, and a positive experience with a fixed exchange rate regime were essential elements in this regard, as was the high degree of economic convergence already achieved in the run up to euro adoption.

Ms Schembri said that the single currency helped engender an environment conducive to growth and prosperity, not only through a significant reduction in transaction costs and enhanced visibility in international markets, but also by way of the policy discipline embedded in the EU’s economic surveillance framework, which was itself reformed in recent years.

Malta’s experience suggests that full participation in Economic and Monetary Union is an enabling factor for economic growth. However, in Malta’s case, the absence of major financial and fiscal shocks that characterised several other countries in the euro area as well as structural reforms aimed at enhancing the economy’s efficiency and resilience to shocks through diversification were also important.

This event was the third in a series of public lectures and workshops in economics and finance being hosted by the Bank to commemorate its 50th Anniversary.