The process
Cyprus is due to join the Euro on 1st January 2008. The process started as far back as May 2005 when Cyprus joined the Exchange Rate Mechanism (ERM II).
In July this year the final conversion rates was set and from September 2007 until June 2008 prices will be displayed in both Euros and Cyprus Pounds.
Later this year the new Euro notes and coins will be available. There will be a one month overlap when both currencies can be used before the Euro becomes ONLY legal tender in Cyprus.

Banks
Banks will be able to replace coins for you until 2009 and notes until 2017. Your bank balances will be converted on 1st January 2008 with no charges and no cheques in Cyprus Pounds can be used after that date.

Rates
The Cyprus Pounds currently trades at around 1.70 and 1 Euro at around 0.58 cents and this can fluctuate by 2.5% either way.
The rate for conversion is due to be locked by August 2007 at the latest and could well be earlier.

Other Issues 
Currently the Cyprus pound is slightly stronger than the Euro so you will effectively get more Euros for your pound.
Inflation may be an issue with general inflation as well as specific price inflation i.e. rounding up. This has happened with other countries so we need to be aware.
Will the Cyprus pound be devalued? Not according to the Governor of the Central Bank who stated on February 13th 2007 that there was no question of devaluation before changeover.

What about Sterling?
As Sterling is outside the Eurozone current fluctuations will continue. It will need to be converted into Euros, not Cyprus Pounds after 1st January. You will still be able to have Sterling accounts in Cyprus Banks.

Interest rates
Interest rates in Cyprus pounds are currently lower than Sterling and Euro interest rates are lower still. That is very good news for borrowers but bad news for savers.
The interest you received may go down by 20% and the Defence Levy of 10% will remain.

Benefits
It will be either to compare prices with the rest of the Countries who use Euros. The exchange rate risk will be reduced. Stability as well as competition should increase and there could well be more EU investment into Cyprus.

The vast majority of the information here is based on information available together with our own thoughts and assumptions.