Virtual bridges:

How the euro and technology are changing an island economy, from The Economist:

In the marinas of Malta there is much talk of gleaming new yachts snapped up by buyers with wads of cash and little interest in sailing. The Maltese lira will disappear in January, when the tiny Mediterranean archipelago joins the euro area. Many Maltese have savings stashed under mattresses and are scared of attracting the taxman's attention if they go to the bank to convert them to euros. Several tax amnesties have yielded little in the way of deposits. Instead, Maltese seem to be rushing to spend their hidden lire on big-ticket items while they still can.

The government is hoping the euro will transport Malta's economy to a bright future based on services. The dwindling of Britain's military presence over the 1970s withered the islands' old fortress economy. With great effort, the authorities lured some manufacturing, including textile factories, microchip plants, and presses that print banknotes. But textiles are drifting off to China and other parts of Asia, and chip foundries might follow, forcing Malta's manufacturers to move upmarket. Increasingly Maltese firms, such as makers of high-quality wooden furniture, are finding that their products are competitive around Europe. Bordeaux's newest posh hotel has doors made in Malta.

Malta is also discovering that in an increasingly virtual world, being an island is no longer an obstacle to providing services, especially in finance and computing. In the late 1980s the government tried building a typical offshore financial-centre, complete with tax sheltering and secrecy. But that got in the way of another Maltese aim—to join the European Union. So the country changed tack and aimed for integration into Europe, with a financial sector that passed all European tests for onshore probity...