The Euro changeover within the Maltese banking sector : a risk management approach

Abstract

The introduction of the euro is a complex, large-scale logistics project, especially for Malta's financial services industry. The local banking sector is at the core of the country's transition from the Maltese lira to the euro, both due to its implementation of the cash changeover strategy as well as due to fundamental changes that need to · be conducted. The introduction of the euro notes and coins will not only affect the bank areas which are highly cash-orientated and which maintain direct customer contact, but will have an effect on the bank as a whole. In fact, converting to the euro is a strategic process which has an impact on the entire organisation and requires important decisions. The positive fact about this changeover is that Malta is not the first country to experience the euro changeover and thus, such an equivalent historical episode can assist the local banks to draw conclusions, however to a certain extent, due to the size of the country and the number of banks and branches present on the Maltese Islands. The analysis has identified various risk areas which will be significantly affected in the short term as well as in the medium and long term. The analysis has led to eight main conclusions.