Euro 'tiddlers'

Euro 'tiddler' aims to keep up with the Joneses, by the FT's Ralph Atkins:

With its harbour view and elegant honey-coloured stone construction, Malta's central bank building evokes a past imperial age. For modern Malta, population just 400,000, the grandeur of the building that once served as a British military club is perhaps disproportionate. But within the expanding eurozone the feeling of power is more apt.

From January 1, when Malta and Cyprus increase the bloc's membership to 15, Michael Bonello, the Maltese central bank governor will, in theory at least, wield as much influence as Axel Weber, the president of Germany's Bundesbank. Eurozone entry will bring advantages to the Mediterranean islands. Mr Bonello says: "It has the potential to improve Malta's economic performance considerably."

Transaction costs will fall and it will be easier to compare prices. Rather than providing a cushion, being part of a monetary union will increase the need to boost competitiveness. As Mr Bonello says: "If you want to keep up with the Joneses, you have to be as productive as the Joneses."

But the entry of Malta and Cyprus, which contribute just 0.06 per cent and 0.17 per cent respectively to eurozone gross domestic product, could put a strain on European Central Bank decision-making processes in Frankfurt. The size of its governing council will rise to 21 - comprising 15 governors of national central banks and six ECB executive board members. Mr Bonello suggests the problem is not as great as it might seem. It is "striking," he says, how council members share the same views on the role of monetary policy...

Wild cards; Euro becomes official currency.