Two new members of the eurozone club

"Today (1 January) is another proud day in Malta’s proud history – a day in which it took its place at the heart of the European Union," the president of the European Commission, Jose Manuel Barroso, said in a statement.

"Today with the adoption of the euro, Cyprus has become even more integrated in the heart of the EU, less than four years after it joined. This is thanks to the stability-orientated economic policies pursued by Cyprus, which I hope will continue," EU Economic and Monetary Affairs Commissioner Joaquin Almunia added.

Both Mediterranean islands joined the EU on May 1, 2004. Their accession to the eurozone was based on their meeting strict economic criteria, such as maintaining inflation and government spending within agreed limits.

The European Central Bank (ECB) in Frankfurt said that the central banks of Cyprus and Malta were now "full members of the Eurosystem" with the same rights and obligations as the previous 13 members in the group.

Both central banks had paid the remainder of their contributions to the capital of the ECB and had likewise made their payments into the ECB’s foreign reserve assets.

"The Cypriot and Maltese counterparties of the Eurosystem will be able to participate in the Eurosystem’s main refinancing operations for the first time on 3 January 2008," the ECB statement said.

Euro notes and coins were initially introduced to 12 EU states – Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain – on January 1, 2002.

Slovenia, which joined the EU at the same time as Cyprus and Malta, joined the single currency on January 1, 2007.

However, consumers in many eurozone states complained that the introduction of the European currency had led to steep price rises as retailers took advantage of the novelty to reap windfall profits.

In Germany, the currency was even nicknamed the "Teuro," from "teuer", the German word for "expensive."

The Maltese and Cypriot governments and the Commission have all pledged to monitor the situation closely, to make sure that no such effect tarnishes the euro’s reputation during this expansion.

The Commission is also set to monitor the new members’ fiscal policies carefully.

Euro members are expected to keep their spending and inflation within strict limits, but the goal of euro adoption is so politically prized that some members have been accused of keeping their figures artificially low until they joined the currency, and then letting them snap back afterwards.

On November 9, Almunia said that Slovenia was setting a bad example to euro hopefuls because its inflation was expected to be well above allowed levels in 2007 and 2008.

January 2008