On 10 July 2007, the Council of the European Union approved Cyprus’ application to join the euro area on 1 January 2008.
On 1 January 2008, the euro became legal tender in Cyprus, replacing the Cyprus pound (CYP) at the irrevocably fixed exchange rate of €1 = CYP 0.585274. The prompt pre-distribution of euro cash to professional third parties prior to 1 January 2008 helped to ensure a smooth cash changeover, alleviate the logistical burden and reduce the costs of dual currency circulation. The pre-distribution of euro banknotes to banks commenced on 19 November 2007, while that of coins started almost a month earlier on 22 October 2007. Some of this cash was then pre-distributed to retailers and other companies (“sub-frontloading”). In addition, euro coin starter kits went on sale to the public at the Central Bank of Cyprus, banks and co-operative credit societies on 3 December 2007. (The pre-distribution of euro banknotes and coins is regulated by ECB Guideline ECB/2006/9.)
The euro changeover progressed smoothly and quickly.
From 1 February 2008, only euro banknotes and coins can be used for cash payments in Cyprus, but banks and co-operative credit societies will exchange Cyprus pounds free of charge at the fixed conversion rate until 30 June 2008. Fees will be charged if the amount per customer and transaction exceeds CYP 1,000 for banknotes and CYP 50 for coins. Thereafter, it will still be possible to exchange Cyprus pound banknotes for ten years and coins for two years at the Central Bank of Cyprus.