The National Euro Changeover Committee yesterday published guidelines when applying rounding and smoothing during the conversion from Maltese Lira to Euro.

These guidelines, according to NECC chairman Joseph FX Zahra, are aimed at ensuring price stability and transparency while providing safeguards to consumers during the changeover process.

All governmental, business and non-profit making organisations are expected to follow these guidelines when applying rounding and smoothing, he said.

The aim of the guidelines is to ensure fairness where conversion of monetary amounts from Maltese lira into euro necessitates the applicability of rounding and smoothing.

The NECC stated that rounding rules in connection with conversions of national currencies into euro have already been established in EU law. Such rules are an integral part of the monetary law of the euro area, which Malta shall form part of upon euro adoption.

Rounding is part of the process of converting a legacy currency unit into euro that expresses the converted number as a round number. e.g. 11.357 rounded off to 2 decimal places becomes 11.36. Smoothing is the process of changing an awkward number after euro conversion to a more acceptable or memorable one, e.g. 10 instead of 10.02.

Mr Zahra stressed the importance that these guidelines will be observed by everyone: �All governmental, business and non-profit making organisations are expected to follow these guidelines when applying rounding and smoothing during the conversion from Maltese lira to euro. These guidelines are specifically aimed at ensuring price stability, transparency and to ensure that consumers are being safeguarded during the changeover process.�

He explained that whenever such guidelines were followed, the changeover process was smooth.

"It is crucial for consumers to feel confident that there is no abuse taking place through the upward smoothing of prices during the changeover process and at the same time it is equally important that businesses are reassured that as long as they apply these guidelines in a fair and transparent way, nobody will be pointing fingers at them."

The guidelines on rounding highlight that the irrevocably fixed conversion rate with six significant figures (e.g. 1 = Lm0.429300) shall be used when converting amounts from Maltese lira to the euro.

The fixed conversion rate may not be rounded or truncated when making conversions. Therefore, calculations with 0.4, 0.43, 0.429 will not be allowed. The guidelines also state that only the irrevocably fixed conversion rate shall be used for calculations. Furthermore, inverse rates (e.g. 2.32937) cannot be used since these might lead to inaccuracies in the conversion of the original amounts.

Amounts converted to euro have to be rounded up or down to the nearest (euro) cent. In all cases, the amount shall be rounded up if the application of the conversion rate gives a result which is exactly half-way (0.005 or 0.5 (euro) cent); e.g. 0.005 is rounded to 0.01.

On the process of smoothing, the NECC stated that here is no official guidance at European level on smoothing of euro amounts and thresholds. However, to set an example and to reduce inflationary pressures that could be identified with the adoption of the euro, any smoothing of converted euro amounts by government (including its agencies and the public sector) will be in favour of the consumer.

The guidelines have stated that smoothing for presentational reasons should be avoided unless it is required to provide consumer convenience in pricing.

Mr Zahra said that the smoothed results of amounts of a similar type should, as far as possible, be consistent across all government organisations: �Government organisations should ensure that citizens with whom they deal are provided with adequate, targeted and easily-understood information on any smoothing of monetary amounts. In the operation of this principle, the needs of vulnerable groups should be taken into account.�

Mr Zahra concluded that these guidelines are extremely important because they provide the necessary protection and safeguards for consumers during and after the changeover process.

"We remain committed to ensure that consumers and vulnerable groups in society will be treated fairly by everyone and it is important that everyone realises that the principles of transparency and fairness will have to prevail during the changeover process. At the same time, abuse will not be tolerated."

The guidelines can be downloaded from the NECC website www.euro.gov.mt. A hard copy of the guidelines may also be obtained from the NECC offices in Valletta.