The euro ( symbol:

€ The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists o ...

; code: EUR) is the official

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...

of 19 out of the member states of the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...

(EU). This group of states is known as the

eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU pol ...

or, officially, the euro area, and includes about 340 million citizens . The euro is divided into 100 cents. The currency is also used officially by the institutions of the European Union, by four European microstates that are not EU members, the British Overseas Territory of

Akrotiri and Dhekelia Akrotiri and Dhekelia, officially the Sovereign Base Areas of Akrotiri and Dhekelia (SBA),, ''Periochés Kyríarchon Váseon Akrotiríou ke Dekélias''; tr, Ağrotur ve Dikelya İngiliz Egemen Üs Bölgeleri is a British Overseas Territory o ...

, as well as unilaterally by

Montenegro ) , image_map = Europe-Montenegro.svg , map_caption = , image_map2 = , capital = Podgorica , coordinates = , largest_city = capital , official_languages = ...

and

Kosovo Kosovo ( sq, Kosova or ; sr-Cyrl, Косово ), officially the Republic of Kosovo ( sq, Republika e Kosovës, links=no; sr, Република Косово, Republika Kosovo, links=no), is a international recognition of Kosovo, partiall ...

. Outside Europe, a number of

special territories of EU members The special territories of members of the European Economic Area (EEA) are the 32 special territories of EU member states and EFTA member states which, for historical, geographical, or political reasons, enjoy special status within or outside ...

also use the euro as their currency. Additionally, over 200 million people worldwide use

currencies pegged to the euro The euro (symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . T ...

. As of 2013, the euro is the second-largest reserve currency as well as the second-most traded currency in the world after the

United States dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...

. , with more than €1.3 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world. The name ''euro'' was officially adopted on 16 December 1995 in

Madrid Madrid ( , ) is the capital and most populous city of Spain. The city has almost 3.4 million inhabitants and a metropolitan area population of approximately 6.7 million. It is the second-largest city in the European Union (EU), and ...

. The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former

European Currency Unit The European Currency Unit (, ; , ECU, or XEU) was a unit of account used by the European Economic Community and composed of a basket of member country currencies. The ECU came in to operation on 13 March 1979 and was assigned the ISO 42 ...

(ECU) at a ratio of 1:1 (US$1.1743). Physical euro coins and banknotes entered into circulation on 1 January 2002, making it the day-to-day operating currency of its original members, and by March 2002 it had completely replaced the former currencies. Between December 1999 and December 2002, the euro traded below the US dollar, but has since traded near parity with or above the US dollar, peaking at US$1.60 on 18 July 2008 and since then returning near to its original issue rate. On 13 July 2022, the two currencies hit parity for the first time in nearly two decades due in part to the

2022 Russian invasion of Ukraine On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. A ...

Characteristics

Administration

European Central Bank - building under construction - Frankfurt - Germany - 13

The euro is managed and administered by the

European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centra ...

(ECB,

Frankfurt am Main Frankfurt, officially Frankfurt am Main (; Hessian: , " Frank ford on the Main"), is the most populous city in the German state of Hesse. Its 791,000 inhabitants as of 2022 make it the fifth-most populous city in Germany. Located on it ...

) and the

Eurosystem The Eurosystem is the monetary authority of the eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The European Central Bank (ECB) has, under Article 16 of its Statute,

(composed of the

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...

s of the eurozone countries). As an independent central bank, the ECB has sole authority to set

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...

. The Eurosystem participates in the printing, minting and distribution of notes and coins in all member states, and the operation of the eurozone payment systems. The 1992

Maastricht Treaty The Treaty on European Union, commonly known as the Maastricht Treaty, is the foundation treaty of the European Union (EU). Concluded in 1992 between the then-twelve member states of the European Communities, it announced "a new stage in the ...

obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary

convergence criteria The euro convergence criteria (also known as the Maastricht criteria) are the criteria which European Union member states are required to meet to enter the third stage of the Economic and Monetary Union (EMU) and adopt the euro as their curre ...

, although not all participating states have done so.

Denmark ) , song = ( en, "King Christian stood by the lofty mast") , song_type = National and royal anthem , image_map = EU-Denmark.svg , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of Denmark , establish ...

has negotiated exemptions, while Sweden (which joined the EU in 1995, after the Maastricht Treaty was signed) turned down the euro in a non-binding referendum in 2003, and has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. The Maastricht Treaty was later amended by the Treaty of Nice, which closed the gaps and loopholes in the Maastricht and Rome Treaties.

Eurozone members

The 19 participating members are
*

Austria Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...

Belgium Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to ...

Cyprus Cyprus ; tr, Kıbrıs (), officially the Republic of Cyprus,, , lit: Republic of Cyprus is an island country located south of the Anatolian Peninsula in the eastern Mediterranean Sea. Its continental position is disputed; while it is ...

Northern Cyprus uses Turkish lira *

Estonia Estonia, formally the Republic of Estonia, is a country by the Baltic Sea in Northern Europe. It is bordered to the north by the Gulf of Finland across from Finland, to the west by the sea across from Sweden, to the south by Latvia, an ...

Finland Finland ( fi, Suomi ; sv, Finland ), officially the Republic of Finland (; ), is a Nordic country in Northern Europe. It shares land borders with Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of Bot ...

France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...

Including outermost regions of

French Guiana French Guiana ( or ; french: link=no, Guyane ; gcr, label= French Guianese Creole, Lagwiyann ) is an overseas department/region and single territorial collectivity of France on the northern Atlantic coast of South America in the Guianas ...

, Guadeloupe,

Martinique Martinique ( , ; gcf, label= Martinican Creole, Matinik or ; Kalinago: or ) is an island and an overseas department/region and single territorial collectivity of France. An integral part of the French Republic, Martinique is located in ...

, Mayotte, Réunion,

Saint Barthélemy Saint Barthélemy (french: Saint-Barthélemy, ), officially the Collectivité territoriale de Saint-Barthélemy, is an overseas collectivity of France in the Caribbean. It is often abbreviated to St. Barth in French, and St. Barts in Englis ...

, Saint Martin, and Saint Pierre and Miquelon *

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...

Greece Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders wi ...

Ireland Ireland ( ; ga, Éire ; Ulster-Scots: ) is an island in the North Atlantic Ocean, in north-western Europe. It is separated from Great Britain to its east by the North Channel, the Irish Sea, and St George's Channel. Ireland is the s ...

Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...

* Latvia * Lithuania *

Luxembourg Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...

Malta Malta ( , , ), officially the Republic of Malta ( mt, Repubblika ta' Malta ), is an island country in the Mediterranean Sea. It consists of an archipelago, between Italy and Libya, and is often considered a part of Southern Europe. It lies ...

Netherlands ) , anthem = ( en, "William of Nassau") , image_map = , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of the Netherlands , established_title = Before independence , established_date = Spanish Netherl ...

Only the European part of the country is part of the European Union and uses the euro. The Caribbean Netherlands introduced the

in 2011. Curaçao, Sint Maarten and Aruba have their own currencies, which are pegged to the dollar. *

Portugal Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of th ...

Slovakia Slovakia (; sk, Slovensko ), officially the Slovak Republic ( sk, Slovenská republika, links=no ), is a landlocked country in Central Europe. It is bordered by Poland to the north, Ukraine to the east, Hungary to the south, Austria to the ...

Slovenia Slovenia ( ; sl, Slovenija ), officially the Republic of Slovenia (Slovene: , abbr.: ''RS''), is a country in Central Europe. It is bordered by Italy to the west, Austria to the north, Hungary to the northeast, Croatia to the southeast, and ...

Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = '' Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , ...

Other users

Micro states with a monetary agreement: *

Andorra , image_flag = Flag of Andorra.svg , image_coat = Coat of arms of Andorra.svg , symbol_type = Coat of arms , national_motto = la, Virtus Unita Fortior, label=none (Latin)"United virtue is stro ...

Monaco Monaco (; ), officially the Principality of Monaco (french: Principauté de Monaco; Ligurian: ; oc, Principat de Mónegue), is a sovereign city-state and microstate on the French Riviera a few kilometres west of the Italian region of Lig ...

San Marino San Marino (, ), officially the Republic of San Marino ( it, Repubblica di San Marino; ), also known as the Most Serene Republic of San Marino ( it, Serenissima Repubblica di San Marino, links=no), is the fifth-smallest country in the world an ...

Vatican City Vatican City (), officially the Vatican City State ( it, Stato della Città del Vaticano; la, Status Civitatis Vaticanae),—' * german: Vatikanstadt, cf. '—' (in Austria: ') * pl, Miasto Watykańskie, cf. '—' * pt, Cidade do Vati ...

EU special territories * French Southern and Antarctic Lands *

* Saint Pierre and Miquelon Unilateral adopters *

Montenegro ) , image_map = Europe-Montenegro.svg , map_caption = , image_map2 = , capital = Podgorica , coordinates = , largest_city = capital , official_languages = ...

See

Montenegro and the euro Montenegro is a country in South-Eastern Europe, which is neither a member of the European Union (EU) nor the Eurozone; it does not have a formal monetary agreement with the EU either. However, it is one of the two territories (along with Kosovo) ...

Pegged currencies

The currency of a number of states is pegged to the euro. These states are: *

Bosnia and Herzegovina Bosnia and Herzegovina ( sh, / , ), abbreviated BiH () or B&H, sometimes called Bosnia–Herzegovina and often known informally as Bosnia, is a country at the crossroads of south and southeast Europe, located in the Balkans. Bosnia and ...

( Bosnia and Herzegovina convertible mark,

ISO 4217 code ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual cu ...

) *

Bulgaria Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedo ...

( Bulgarian lev, ) * Cape Verde (

Cape Verdean escudo The escudo (sign: ; ISO 4217: CVE) is the currency of the Republic of Cape Verde. One escudo is subdivided into one hundred ''centavos''. Amounts are generally written by using the () as the decimal separator, such as for 20 escudos, or for ...

, ) *

Cameroon Cameroon (; french: Cameroun, ff, Kamerun), officially the Republic of Cameroon (french: République du Cameroun, links=no), is a country in west-central Africa. It is bordered by Nigeria to the west and north; Chad to the northeast; the ...

( Central African CFA franc, ) *

Central African Republic The Central African Republic (CAR; ; , RCA; , or , ) is a landlocked country in Central Africa. It is bordered by Chad to the north, Sudan to the northeast, South Sudan to the southeast, the DR Congo to the south, the Republic of th ...

(Central African CFA franc) * Chad (Central African CFA franc) * Equatorial Guinea (Central African CFA franc) *

Gabon Gabon (; ; snq, Ngabu), officially the Gabonese Republic (french: République gabonaise), is a country on the west coast of Central Africa. Located on the equator, it is bordered by Equatorial Guinea to the northwest, Cameroon to the nort ...

(Central African CFA franc) * Republic of the Congo (Central African CFA franc) * French Polynesia ( CFP franc, ) * New Caledonia (CFP franc) * Wallis and Futuna (CFP franc) * Comoros (

Comorian franc The franc (french: link=no, franc comorien; ar, فرنك قمري; sign: FC; ISO 4217 code: KMF) is the official currency of Comoros. It is nominally subdivided into 100 ''centimes'', although no centime denominations have ever been issued. His ...

, ) *

Croatia , image_flag = Flag of Croatia.svg , image_coat = Coat of arms of Croatia.svg , anthem = " Lijepa naša domovino"("Our Beautiful Homeland") , image_map = , map_caption = , capi ...

( Croatian kuna, ) *

( Danish krone, ) *

Faroe Islands The Faroe Islands ( ), or simply the Faroes ( fo, Føroyar ; da, Færøerne ), are a North Atlantic island group and an autonomous territory of the Kingdom of Denmark. They are located north-northwest of Scotland, and about halfway bet ...

( Faroese króna) *

North Macedonia North Macedonia, ; sq, Maqedonia e Veriut, (Macedonia before February 2019), officially the Republic of North Macedonia,, is a country in Southeast Europe. It gained independence in 1991 as one of the successor states of Socialist Feder ...

( Macedonian denar, ) *

Sovereign Military Order of Malta The Sovereign Military Order of Malta (SMOM), officially the Sovereign Military Hospitaller Order of Saint John of Jerusalem, of Rhodes and of Malta ( it, Sovrano Militare Ordine Ospedaliero di San Giovanni di Gerusalemme, di Rodi e di Malta; ...

( Maltese scudo) * São Tomé and Príncipe ( São Tomé and Príncipe dobra, ) * Benin ( West African CFA franc, ) *

Burkina Faso Burkina Faso (, ; , ff, 𞤄𞤵𞤪𞤳𞤭𞤲𞤢 𞤊𞤢𞤧𞤮, italic=no) is a landlocked country in West Africa with an area of , bordered by Mali to the northwest, Niger to the northeast, Benin to the southeast, Togo and Ghana t ...

(West African CFA franc) * Côte d'Ivoire (West African CFA franc) *

Guinea-Bissau Guinea-Bissau ( ; pt, Guiné-Bissau; ff, italic=no, 𞤘𞤭𞤲𞤫 𞤄𞤭𞤧𞤢𞥄𞤱𞤮, Gine-Bisaawo, script=Adlm; Mandinka: ''Gine-Bisawo''), officially the Republic of Guinea-Bissau ( pt, República da Guiné-Bissau, links=no ) ...

(West African CFA franc) *

Mali Mali (; ), officially the Republic of Mali,, , ff, 𞤈𞤫𞤲𞥆𞤣𞤢𞥄𞤲𞤣𞤭 𞤃𞤢𞥄𞤤𞤭, Renndaandi Maali, italics=no, ar, جمهورية مالي, Jumhūriyyāt Mālī is a landlocked country in West Africa. Ma ...

(West African CFA franc) *

Niger ) , official_languages = , languages_type = National languagesSenegal (West African CFA franc) * Togo (West African CFA franc)

Coins and banknotes

Coins

The euro is divided into 100 cents (also referred to as ''euro cents'', especially when distinguishing them from other currencies, and referred to as such on the common side of all cent coins). In Community legislative acts the plural forms of ''euro'' and ''cent'' are spelled without the ''s'', notwithstanding normal English usage. Otherwise, normal English plurals are used, with many local variations such as ''centime'' in France. All circulating coins have a ''common side'' showing the denomination or value, and a map in the background. Due to the linguistic plurality in the European Union, the Latin alphabet version of ''euro'' is used (as opposed to the less common Greek or Cyrillic) and Arabic numerals (other text is used on national sides in national languages, but other text on the common side is avoided). For the denominations except the 1-, 2- and 5-cent coins, the map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 (depending on the country), the old map was replaced by a map of Europe also showing countries outside the EU. The 1-, 2- and 5-cent coins, however, keep their old design, showing a geographical map of Europe with the 15 member states of 2002 raised somewhat above the rest of the map. All common sides were designed by

Luc Luycx Luc Luycx (; born 11 April 1958) is the designer of the common side of the euro coins. Luycx is a computer engineer and medallist. He was born in Aalst, Belgium and now lives in Dendermonde. Luycx worked for the Royal Belgian Mint. He designed th ...

. The coins also have a ''national side'' showing an image specifically chosen by the country that issued the coin. Euro coins from any member state may be freely used in any nation that has adopted the euro. The coins are issued in denominations of €2, €1, 50c, 20c, 10c, 5c, 2c, and 1c. To avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands and Ireland (by voluntary agreement) and in Finland and Italy (by law). This practice is discouraged by the commission, as is the practice of certain shops of refusing to accept high-value euro notes. Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin. These include both commonly issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, and nationally issued coins, such as the coin to commemorate the 2004 Summer Olympics issued by Greece. These coins are legal tender throughout the eurozone. Collector coins with various other denominations have been issued as well, but these are not intended for general circulation, and they are legal tender only in the member state that issued them.

Coin minting

A number of institutions are authorised to mint euro coins: * Bayerisches Hauptmünzamt, Munich ( Mint mark: D) *

Currency Centre The Currency Centre (also known as the Irish Mint) is the mint of coins and printer of banknotes for the Central Bank of Ireland, including the euro currency. The centre is located in Sandyford, Dublin, Ireland. The centre does not print the ...

Fábrica Nacional de Moneda y Timbre The Royal Mint of Spain ( es, Fábrica Nacional de Moneda y Timbre – Real Casa de la Moneda, lit=National Coinage and Stamp Factory – Royal Mint, FNMT-RCM) is the national mint of Spain. The FNMT-RCM is a public corporation that is attached t ...

Hamburgische Münze The Hamburgische Münze is a European coin mint located in the city of Hamburg. It is one of the four German coin mints, the others being the Staatliche Münzen Baden-Württemberg, the Bavarian State Mint, and the Staatliche Münze Berlin. The ...

(J) *

Imprensa Nacional Casa da Moeda The Imprensa Nacional-Casa da Moeda (National Printing House, and Mint, abbreviated INCM), is the Portuguese mint and national press, owned by the Portuguese Government and administratively subordinated to the Portuguese Ministry of Finance. It is ...

SA *

Istituto Poligrafico e Zecca dello Stato The Italian Istituto Poligrafico e Zecca dello Stato (IPZS) (State Mint and Polygraphic Institute), founded in 1928, is situated at the via Salaria 691 in Rome. As well as producing coins, passports, and postage stamps for Italy, it serves the mi ...

Koninklijke Nederlandse Munt The Royal Dutch Mint (''Koninklijke Nederlandse Munt'', abbreviated ''KNM'') based in Houten, the Netherlands, is a company owned by Heylen Group. It was established and previously owned by the Dutch state. History On 17 September 1806, when Th ...

* Koninklijke Munt van België/Monnaie Royale de Belgique * Mincovňa Kremnica * Monnaie de Paris * Münze Österreich * Rahapaja Oy/Myntverket i Finland Ab *

Staatliche Münze Berlin The Staatliche Münze Berlin (SMB) is a European coin mint located in the city of Berlin. It is one of the four German coin mints, the others being the Staatliche Münzen Baden-Württemberg, the Bavarian State Mint, and the Hamburgische Münze. ...

(A) * Staatliche Münze Karlsruhe (G) * Staatliche Münze Stuttgart (F) *

Lithuanian Mint Lithuanian Mint ( lt, Lietuvos monetų kalykla) is the state-owned enterprise, responsible for the mintage of coins and decorations of Lithuania. The shareholding is managed by the central bank of Lithuania. Lithuanian mintage tradition traces ...

Banknotes

The design for the

euro banknotes Banknotes of the euro, the common currency of the Eurozone (euro area members), have been in circulation since the first series (also called ''ES1'') was issued in 2002. They are issued by the national central banks of the Eurosystem or the ...

has common designs on both sides. The design was created by the Austrian designer Robert Kalina. Notes are issued in €500, €200, €100, €50, €20, €10, and €5. Each banknote has its own colour and is dedicated to an artistic period of European architecture. The front of the note features windows or gateways while the back has bridges, symbolising links between states in the union and with the future. While the designs are supposed to be devoid of any identifiable characteristics, the initial designs by Robert Kalina were of specific bridges, including the Rialto and the Pont de Neuilly, and were subsequently rendered more generic; the final designs still bear very close similarities to their specific prototypes; thus they are not truly generic. The monuments looked similar enough to different national monuments to please everyone. The Europa series, or second series, consists of six denominations and no longer includes the €500 with issuance discontinued as of 27 April 2019. However, both the first and the second series of euro banknotes, including the €500, remain legal tender throughout the euro area. In December 2021, the ECB announced its plans to redesign euro banknotes by 2024. A theme advisory group, made up of one member from each euro area country, was selected to submit theme proposals to the ECB. The proposals will be voted on by the public; a design competition will also be held.

Issuing modalities for banknotes

Since 1 January 2002, the national central banks (NCBs) and the ECB have issued euro banknotes on a joint basis. Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated. The ECB issues 8% of the total value of banknotes issued by the Eurosystem. In practice, the ECB's banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB. These liabilities carry interest at the main refinancing rate of the ECB. The other 92% of euro banknotes are issued by the NCBs in proportion to their respective shares of the ECB capital key, calculated using national share of European Union (EU) population and national share of EU GDP, equally weighted.

Banknote printing

Member states are authorised to print or to commission bank note printing. , these are the printers: *

Banco de Portugal The Banco de Portugal (English: Bank of Portugal) is the central bank of the Portuguese Republic. The bank was founded by royal charter in 1846, during the reign of Queen Maria II of Portugal, by a merger of the '' Banco de Lisboa'' (Bank of Lis ...

* Bank of Greece *

Banque de France The Bank of France (French: ''Banque de France''), headquartered in Paris, is the central bank of France. Founded in 1800, it began as a private institution for managing state debts and issuing notes. It is responsible for the accounts of the ...

Bundesdruckerei Bundesdruckerei ("Federal Press", short form: BDr) produces documents and devices for secure identification and offers corresponding services. It is based in the Berlin district of Kreuzberg. In addition to complete passport and ID card syste ...

* Central Bank of Ireland * De La Rue *

* François-Charles Oberthur * Giesecke & Devrient * Royal Joh. Enschedé *

National Bank of Belgium The National Bank of Belgium (NBB; nl, Nationale Bank van België, french: Banque nationale de Belgique, german: Belgische Nationalbank) has been the central bank of Belgium since 1850. The National Bank of Belgium was established with 100% p ...

Oesterreichische Nationalbank The Oesterreichische Nationalbank (OeNB) is the central bank of Austria and, as such, an integral part of both the European System of Central Banks (ESCB) and the Eurozone. It started operations on , replacing the Austro-Hungarian Bank of whic ...

* Setec Oy

Payments clearing, electronic funds transfer

Capital within the EU may be transferred in any amount from one state to another. All intra-Union transfers in euro are treated as domestic transactions and bear the corresponding domestic transfer costs. This includes all member states of the EU, even those outside the eurozone providing the transactions are carried out in euro. Credit/debit card charging and ATM withdrawals within the eurozone are also treated as domestic transactions; however paper-based payment orders, like cheques, have not been standardised so these are still domestic-based. The ECB has also set up a

clearing system A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchange possible.Biago ...

TARGET Target may refer to: Physical items * Shooting target, used in marksmanship training and various shooting sports ** Bullseye (target), the goal one for which one aims in many of these sports ** Aiming point, in field artillery, fi ...

, for large euro transactions.

History

Introduction

The euro was established by the provisions in the 1992

. To participate in the currency, member states are meant to meet strict criteria, such as a budget deficit of less than 3% of their GDP, a debt ratio of less than 60% of GDP (both of which were ultimately widely flouted after introduction), low inflation, and

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...

rates close to the EU average. In the Maastricht Treaty, the United Kingdom and Denmark were granted exemptions per their request from moving to the stage of monetary union which resulted in the introduction of the euro. The name "euro" was officially adopted in

on 16 December 1995. Belgian Esperantist

Germain Pirlot Germain Pirlot (born 18 March 1943 in Sart-Custinne, Gedinne, Belgium) is a Belgian esperantist and ex-teacher of French and history, presently living in Ostend. He is best known as the inventor of the name ''euro'' for the common currency of t ...

, a former teacher of French and history, is credited with naming the new currency by sending a letter to then President of the European Commission,

Jacques Santer Jacques Santer (born 18 May 1937) is a Luxembourg politician who served as the 9th President of the European Commission from 1995 to 1999. He served as Finance Minister of Luxembourg from 1979 until 1989, and the 20th Prime Minister of Luxe ...

, suggesting the name "euro" on 4 August 1995. Due to differences in national conventions for rounding and significant digits, all conversion between the national currencies had to be carried out using the process of triangulation via the euro. The ''definitive'' values of one euro in terms of the exchange rates at which the currency entered the euro are shown on the right. The rates were determined by the

Council of the European Union The Council of the European Union, often referred to in the treaties and other official documents simply as the Council, and informally known as the Council of Ministers, is the third of the seven Institutions of the European Union (EU) as ...

,by means of Council Regulation 2866/98 (EC) of 31 December 1998. based on a recommendation from the European Commission based on the market rates on 31 December 1998. They were set so that one

(ECU) would equal one euro. The European Currency Unit was an accounting unit used by the EU, based on the currencies of the member states; it was not a currency in its own right. They could not be set earlier, because the ECU depended on the closing exchange rate of the non-euro currencies (principally sterling) that day. The procedure used to fix the conversion rate between the Greek drachma and the euro was different since the euro by then was already two years old. While the conversion rates for the initial eleven currencies were determined only hours before the euro was introduced, the conversion rate for the Greek drachma was fixed several months beforehand.by Council Regulation 1478/2000 (EC) of 19 June 2000 The currency was introduced in non-physical form (

traveller's cheque A traveller's cheque is a medium of exchange that can be used in place of hard currency. They can be denominated in one of a number of major world currencies and are preprinted, fixed-amount cheques designed to allow the person signing it to ma ...

s, electronic transfers, banking, etc.) at midnight on 1 January 1999, when the national currencies of participating countries (the eurozone) ceased to exist independently. Their exchange rates were locked at fixed rates against each other. The euro thus became the successor to the

(ECU). The notes and coins for the old currencies, however, continued to be used as legal tender until new euro notes and coins were introduced on 1 January 2002. The changeover period during which the former currencies' notes and coins were exchanged for those of the euro lasted about two months, until 28 February 2002. The official date on which the national currencies ceased to be legal tender varied from member state to member state. The earliest date was in Germany, where the

mark Mark may refer to: Currency * Bosnia and Herzegovina convertible mark, the currency of Bosnia and Herzegovina * East German mark, the currency of the German Democratic Republic * Estonian mark, the currency of Estonia between 1918 and 1927 * Finn ...

officially ceased to be legal tender on 31 December 2001, though the exchange period lasted for two months more. Even after the old currencies ceased to be legal tender, they continued to be accepted by national central banks for periods ranging from several years to indefinitely (the latter for Austria, Germany, Ireland, Estonia and Latvia in banknotes and coins, and for Belgium, Luxembourg, Slovenia and Slovakia in banknotes only). The earliest coins to become non-convertible were the Portuguese escudos, which ceased to have monetary value after 31 December 2002, although banknotes remained exchangeable until 2022.

Currency sign

A special euro currency sign (€) was designed after a public survey had narrowed the original ten proposals down to two. The

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...

then chose the design created by the Belgian artist Alain Billiet. Of the symbol, the Commission stated The European Commission also specified a euro logo with exact proportions and foreground and background colour tones. Placement of the currency sign relative to the numeric amount varies from state to state, but for texts in English the symbol (or the ISO-standard "EUR") should precede the amount.

Eurozone crisis

Government surplus or deficit (EU-USA-UK)

Following the U.S. financial crisis in 2008, fears of a sovereign debt crisis developed in 2009 among investors concerning some European states, with the situation becoming particularly tense in early 2010.

was most acutely affected, but fellow Eurozone members

, and

were also significantly affected. All these countries used EU funds except Italy, which is a major donor to the EFSF. To be included in the eurozone, countries had to fulfil certain

, but the meaningfulness of such criteria was diminished by the fact it was not enforced with the same level of strictness among countries. According to the

Economist Intelligence Unit The Economist Intelligence Unit (EIU) is the research and analysis division of the Economist Group, providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, ...

in 2011, " the

uro area Uro or URO may refer to: * Aurochs, the predecessor of modern cattle * Uro Bonsai technique; see deadwood bonsai techniques * Uro, Delta, Nigeria * ''Uro'' (film), directed by Stefan Faldbakken * Uro (trucks), a Spanish truck manufacturer * '' ...

is treated as a single entity, its conomic and fiscalposition looks no worse and in some respects, rather better than that of the US or the UK" and the budget deficit for the euro area as a whole is much lower and the euro area's government debt/GDP ratio of 86% in 2010 was about the same level as that of the United States. "Moreover", they write, "private-sector indebtedness across the euro area as a whole is markedly lower than in the highly leveraged Anglo-Saxon economies". The authors conclude that the crisis "is as much political as economic" and the result of the fact that the euro area lacks the support of "institutional

paraphernalia Paraphernalia most commonly refers to a group of apparatus, equipment, or furnishing used for a particular activity. For example, an avid sports fan may cover their walls with football and/or basketball paraphernalia. Historical legal term In l ...

(and mutual bonds of solidarity) of a state". The crisis continued with S&P downgrading the credit rating of nine euro-area countries, including France, then downgrading the entire European Financial Stability Facility (EFSF) fund. A historical parallel – to 1931 when Germany was burdened with debt, unemployment and austerity while France and the United States were relatively strong creditors – gained attention in summer 2012 even as Germany received a debt-rating warning of its own. In the enduring of this scenario the euro serves as a mean of quantitative primitive accumulation.

Direct and indirect usage

Agreed direct usage with minting rights

The euro is the sole currency of 19 EU member states: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. These countries constitute the "

", some 343 million people in total . According to bilateral agreements with the EU, the euro has also been designated as the sole and official currency in a further four European microstates awarded minting rights (Andorra, Monaco, San Marino and the Vatican City). With all but one (Denmark) EU members obliged to join when economic conditions permit, together with future members of the EU, the enlargement of the eurozone is set to continue.

Agreed direct usage without minting rights

The euro is also the sole currency in three overseas territories of France that are not themselves part of the EU, namely

, Saint Pierre and Miquelon, and the French Southern and Antarctic Lands, as well as in the British Overseas Territory of

Unilateral direct usage

Moreover, it has also been adopted unilaterally as the sole currency of Montenegro and Kosovo. The euro has also been used as a foreign trading currency in Cuba since 1998, Syria since 2006, and Venezuela since 2018. In 2009, Zimbabwe abandoned its local currency and introduced major global convertible currencies instead, including the euro and the United States dollar. The direct usage of the euro outside of the official framework of the EU affects nearly 3 million people.

Currencies pegged to the euro

Outside the eurozone, several EU member states have currencies that are pegged to the euro, which is a precondition to joining the eurozone. The Danish krone, Croatian kuna, and Bulgarian lev are pegged due to their participation in the ERM II. Additionally, a total of 21 countries and territories that do not belong to the EU have currencies that are directly pegged to the euro including 14 countries in mainland Africa ( CFA franc), two African island countries (

and

), three French Pacific territories ( CFP franc) and two Balkan countries, Bosnia and Herzegovina ( Bosnia and Herzegovina convertible mark) and North Macedonia ( Macedonian denar). On 1 January 2010, the dobra of São Tomé and Príncipe was officially linked with the euro. Additionally, the Moroccan dirham is tied to a basket of currencies, including the euro and the US dollar, with the euro given the highest weighting. These countries generally had previously implemented a currency peg to one of the major European currencies (e.g. the French franc, Deutsche mark or

Portuguese escudo The Portuguese escudo was the currency of Portugal from May 22nd 1911 until the introduction of the euro on January 1st 2002. The escudo was subdivided into 100 . The word derives from the scutum shield. Amounts in escudos were written as ...

), and when these currencies were replaced by the euro their currencies became pegged to the euro. Pegging a country's currency to a major currency is regarded as a safety measure, especially for currencies of areas with weak economies, as the euro is seen as a stable currency, prevents runaway inflation, and encourages foreign investment due to its stability. In total, , 182 million people in Africa use a currency pegged to the euro, 27 million people outside the eurozone in Europe, and another 545,000 people on Pacific islands. Since 2005, stamps issued by the

have been denominated in euro, although the Order's official currency remains the Maltese scudo. The Maltese scudo itself is pegged to the euro and is only recognised as legal tender within the Order.

Use as reserve currency

Since its introduction, the euro has been the second most widely held international reserve currency after the U.S. dollar. The share of the euro as a reserve currency increased from 18% in 1999 to 27% in 2008. Over this period, the share held in U.S. dollar fell from 71% to 64% and that held in RMB fell from 6.4% to 3.3%. The euro inherited and built on the status of the Deutsche Mark as the second most important reserve currency. The euro remains underweight as a reserve currency in advanced economies while overweight in emerging and developing economies: according to the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...

the total of euro held as a reserve in the world at the end of 2008 was equal to $1.1 trillion or €850 billion, with a share of 22% of all currency reserves in advanced economies, but a total of 31% of all currency reserves in emerging and developing economies. The possibility of the euro becoming the first international reserve currency has been debated among economists. Former

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

Chairman

Alan Greenspan Alan Greenspan (born March 6, 1926) is an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. ...

gave his opinion in September 2007 that it was "absolutely conceivable that the euro will replace the US dollar as reserve currency, or will be traded as an equally important reserve currency". In contrast to Greenspan's 2007 assessment, the euro's increase in the share of the worldwide currency reserve basket has slowed considerably since 2007 and since the beginning of the worldwide

credit crunch A credit crunch (also known as a credit squeeze, credit tightening or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks. A credit cr ...

related recession and

European sovereign-debt crisis The European debt crisis, often also referred to as the eurozone crisis or the European sovereign debt crisis, is a multi-year debt crisis that took place in the European Union (EU) from 2009 until the mid to late 2010s. Several eurozone me ...

Economics

Optimal currency area

In economics, an optimum currency area, or region (OCA or OCR), is a geographical region in which it would maximise economic efficiency to have the entire region share a single currency. There are two models, both proposed by Robert Mundell: the stationary expectations model and the international risk sharing model. Mundell himself advocates the international risk sharing model and thus concludes in favour of the euro. However, even before the creation of the single currency, there were concerns over diverging economies. Before the late-2000s recession it was considered unlikely that a state would leave the euro or the whole zone would collapse. However the Greek government-debt crisis led to former British Foreign Secretary Jack Straw claiming the eurozone could not last in its current form. Part of the problem seems to be the rules that were created when the euro was set up. John Lanchester, writing for ''

The New Yorker ''The New Yorker'' is an American weekly magazine featuring journalism, commentary, criticism, essays, fiction, satire, cartoons, and poetry. Founded as a weekly in 1925, the magazine is published 47 times annually, with five of these issues ...

'', explains it:

Transaction costs and risks

The most obvious benefit of adopting a single currency is to remove the cost of exchanging currency, theoretically allowing businesses and individuals to consummate previously unprofitable trades. For consumers, banks in the eurozone must charge the same for intra-member cross-border transactions as purely domestic transactions for electronic payments (e.g.,

credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the ...

s, debit cards and cash machine withdrawals). Financial markets on the continent are expected to be far more liquid and flexible than they were in the past. The reduction in cross-border transaction costs will allow larger banking firms to provide a wider array of banking services that can compete across and beyond the eurozone. However, although transaction costs were reduced, some studies have shown that

risk aversion In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more ...

has increased during the last 40 years in the Eurozone.

Price parity

Another effect of the common European currency is that differences in prices—in particular in price levels—should decrease because of the law of one price. Differences in prices can trigger arbitrage, i.e., speculative trade in a commodity across borders purely to exploit the price differential. Therefore, prices on commonly traded goods are likely to converge, causing inflation in some regions and deflation in others during the transition. Some evidence of this has been observed in specific eurozone markets.

Macroeconomic stability

Before the introduction of the euro, some countries had successfully contained inflation, which was then seen as a major economic problem, by establishing largely independent central banks. One such bank was the

Bundesbank The Deutsche Bundesbank (), literally "German Federal Bank", is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks (ESCB). Due to its strength and former size, the Bundesbank is the mos ...

in Germany; the European Central Bank was modelled on the Bundesbank. The euro has come under criticism due to its regulation, lack of flexibility and rigidity towards sharing member states on issues such as nominal interest rates. Many national and corporate bonds denominated in euro are significantly more liquid and have lower interest rates than was historically the case when denominated in national currencies. While increased liquidity may lower the nominal interest rate on the bond, denominating the bond in a currency with low levels of inflation arguably plays a much larger role. A credible commitment to low levels of inflation and a stable debt reduces the risk that the value of the debt will be eroded by higher levels of inflation or default in the future, allowing debt to be issued at a lower nominal interest rate. Unfortunately, there is also a cost in structurally keeping inflation lower than in the United States, UK, and China. The result is that seen from those countries, the euro has become expensive, making European products increasingly expensive for its largest importers; hence export from the eurozone becomes more difficult. In general, those in Europe who own large amounts of euro are served by high stability and low inflation. A monetary union means states in that union lose the main mechanism of recovery of their international competitiveness by weakening ( depreciating) their currency. When wages become too high compared to productivity in exports sector, then these exports become more expensive and they are crowded out from the market within a country and abroad. This drives the fall of employment and output in the exports sector and fall of

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exc ...

and current account balances. Fall of output and employment in tradable goods sector may be offset by the growth of non-exports sectors, especially in

construction Construction is a general term meaning the art and science to form objects, systems, or organizations,"Construction" def. 1.a. 1.b. and 1.c. ''Oxford English Dictionary'' Second Edition on CD-ROM (v. 4.0) Oxford University Press 2009 and ...

and services. Increased purchases abroad and negative current account balance can be financed without a problem as long as credit is cheap. The need to finance trade deficit weakens currency, making exports automatically more attractive in a country and abroad. A state in a monetary union cannot use weakening of currency to recover its international competitiveness. To achieve this a state has to reduce prices, including wages ( deflation). This could result in high

unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refe ...

and lower incomes as it was during

Trade

The euro increased price transparency and stimulated cross-border trade. A 2009 consensus from the studies of the introduction of the euro concluded that it has increased trade within the eurozone by 5% to 10%, although one study suggested an increase of only 3% while another estimated 9 to 14%. However, a

meta-analysis A meta-analysis is a statistical analysis that combines the results of multiple scientific studies. Meta-analyses can be performed when there are multiple scientific studies addressing the same question, with each individual study reporting m ...

of all available studies suggests that the prevalence of positive estimates is caused by publication bias and that the underlying effect may be negligible. Although a more recent meta-analysis shows that publication bias decreases over time and that there are positive trade effects from the introduction of the euro, as long as results from before 2010 are taken into account. This may be because of the inclusion of the

Financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of ...

and ongoing integration within the EU. Furthermore, older studies accounting for time trend reflecting general cohesion policies in Europe that started before, and continue after implementing the common currency find no effect on trade. These results suggest that other policies aimed at European integration might be the source of observed increase in trade. According to Barry Eichengreen, studies disagree on the magnitude of the effect of the euro on trade, but they agree that it did have an effect.

Investment

Physical investment seems to have increased by 5% in the eurozone due to the introduction. Regarding foreign direct investment, a study found that the intra-eurozone FDI stocks have increased by about 20% during the first four years of the EMU. Concerning the effect on corporate investment, there is evidence that the introduction of the euro has resulted in an increase in investment rates and that it has made it easier for firms to access financing in Europe. The euro has most specifically stimulated investment in companies that come from countries that previously had weak currencies. A study found that the introduction of the euro accounts for 22% of the investment rate after 1998 in countries that previously had a weak currency.

Inflation

The introduction of the euro has led to extensive discussion about its possible effect on inflation. In the short term, there was a widespread impression in the population of the eurozone that the introduction of the euro had led to an increase in prices, but this impression was not confirmed by general indices of inflation and other studies. A study of this paradox found that this was due to an asymmetric effect of the introduction of the euro on prices: while it had no effect on most goods, it had an effect on cheap goods which have seen their price round up after the introduction of the euro. The study found that consumers based their beliefs on inflation of those cheap goods which are frequently purchased. It has also been suggested that the jump in small prices may be because prior to the introduction, retailers made fewer upward adjustments and waited for the introduction of the euro to do so.

Exchange rate risk

One of the advantages of the adoption of a common currency is the reduction of the risk associated with changes in currency exchange rates. It has been found that the introduction of the euro created "significant reductions in market risk exposures for nonfinancial firms both in and outside Europe". These reductions in market risk "were concentrated in firms domiciled in the eurozone and in non-euro firms with a high fraction of foreign sales or assets in Europe".

Financial integration

The introduction of the euro increased European financial integration, which helped stimulate growth of a European securities market (bond markets are characterized by

economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...

dynamics). According to a study on this question, it has "significantly reshaped the European financial system, especially with respect to the securities markets ..However, the real and policy barriers to integration in the retail and corporate banking sectors remain significant, even if the wholesale end of banking has been largely integrated." Specifically, the euro has significantly decreased the cost of trade in bonds, equity, and banking assets within the eurozone. On a global level, there is evidence that the introduction of the euro has led to an integration in terms of investment in bond portfolios, with eurozone countries lending and borrowing more between each other than with other countries. Financial integration made it cheaper for European companies to borrow. Banks, firms and households could also invest more easily outside of their own country, thus creating greater international risk-sharing.

Effect on interest rates

Long-term interest rates of eurozone countries since 1993

As of January 2014, and since the introduction of the euro, interest rates of most member countries (particularly those with a weak currency) have decreased. Some of these countries had the most serious sovereign financing problems. The effect of declining interest rates, combined with excess liquidity continually provided by the ECB, made it easier for banks within the countries in which interest rates fell the most, and their linked sovereigns, to borrow significant amounts (above the 3% of GDP budget deficit imposed on the eurozone initially) and significantly inflate their public and private debt levels. Following the

financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of ...

, governments in these countries found it necessary to bail out or nationalise their privately held banks to prevent systemic failure of the banking system when underlying hard or financial asset values were found to be grossly inflated and sometimes so nearly worthless there was no liquid market for them. This further increased the already high levels of public debt to a level the markets began to consider unsustainable, via increasing government bond interest rates, producing the ongoing European sovereign-debt crisis.

Price convergence

The evidence on the convergence of prices in the eurozone with the introduction of the euro is mixed. Several studies failed to find any evidence of convergence following the introduction of the euro after a phase of convergence in the early 1990s. Other studies have found evidence of price convergence, in particular for cars. A possible reason for the divergence between the different studies is that the processes of convergence may not have been linear, slowing down substantially between 2000 and 2003, and resurfacing after 2003 as suggested by a recent study (2009).

Tourism

A study suggests that the introduction of the euro has had a positive effect on the amount of tourist travel within the EMU, with an increase of 6.5%.

Exchange rates

Flexible exchange rates

The ECB targets

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, t ...

s rather than exchange rates and in general, does not intervene on the foreign exchange rate markets. This is because of the implications of the Mundell–Fleming model, which implies a central bank cannot (without capital controls) maintain interest rate and exchange rate targets simultaneously, because increasing the

money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...

results in a

depreciation In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the ...

of the currency. In the years following the

Single European Act The Single European Act (SEA) was the first major revision of the 1957 Treaty of Rome. The Act set the European Community an objective of establishing a single market by 31 December 1992, and a forerunner of the European Union's Common Fore ...

, the EU has liberalised its capital markets and, as the ECB has inflation targeting as its

, the exchange-rate regime of the euro is floating.

Against other major currencies

The euro is the second-most widely held reserve currency after the U.S. dollar. After its introduction on 4 January 1999 its exchange rate against the other major currencies fell reaching its lowest exchange rates in 2000 (3 May vs sterling, 25 October vs the

U.S. dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

, 26 October vs Japanese yen). Afterwards it regained and its exchange rate reached its historical highest point in 2008 (15 July vs US dollar, 23 July vs Japanese yen, 29 December vs sterling). With the advent of the global financial crisis the euro initially fell, to regain later. Despite pressure due to the

the euro remained stable. In November 2011 the euro's exchange rate index – measured against currencies of the bloc's major trading partners – was trading almost two percent higher on the year, approximately at the same level as it was before the crisis kicked off in 2007. In mid July, 2022, the euro equalled the US dollar for a short period of time. *Current and historical exchange rates against 32 other currencies (European Central Bank):
link
'

Political considerations

Besides the economic motivations to the introduction of the euro, its creation was also partly justified as a way to foster a closer sense of joint identity between European citizens. Statements about this goal were for instance made by Wim Duisenberg, European Central Bank Governor, in 1998, Laurent Fabius, French Finance Minister, in 2000, and Romano Prodi, President of the European Commission, in 2002. However, 15 years after the introduction of the euro, a study found no evidence that it has had a positive influence on a shared sense of European identity (and no evidence that it had a negative effect either).

''euro'' in various languages

The formal titles of the currency are ''euro'' for the major unit and ''cent'' for the minor (one-hundredth) unit and for official use in most eurozone languages; according to the ECB, all languages should use the same spelling for the nominative singular. This may contradict normal rules for word formation in some languages, e.g., those in which there is no ''eu'' diphthong. Bulgaria has negotiated an exception; ''euro'' in the Bulgarian Cyrillic alphabet is spelled eвро (''evro'') and not eуро (''euro'') in all official documents. In the Greek script the term ευρώ (evró) is used; the Greek "cent" coins are denominated in λεπτό/ά (leptó/á). Official practice for English-language EU legislation is to use the words euro and cent as both singular and plural, although the European Commission's

Directorate-General for Translation The Directorate-General for Translation (DGT), located in Brussels and Luxembourg, provides translations of written text into and out of the European Union's twenty-four official languages. With an annual output of about 1.5 million pages, it is th ...

states that the plural forms ''euros'' and ''cents'' should be used in English. The word 'euro' is pronounced differently according to pronunciation rules in the individual languages applied; in German , in English , in French , etc.From foreign language dictionaries. In summary: * In most EU languages: euro * german: Euro * bg, евро * el, ευρώ * hu, euró * lv, eiro * lt, euras * mt, ewro * sl, evro For local phonetics, cent, use of plural and amount formatting (€6,00 or 6.00 €), see

Language and the euro Several linguistic issues have arisen in relation to the spelling of the words '' euro'' and ''cent'' in the many languages of the member states of the European Union, as well as in relation to grammar and the formation of plurals. In officia ...

Notes

References

External links

European Union – Euro

European Commission – Euro Area

{{Authority control 1999 in economics Currencies introduced in 1999 Currencies introduced in 2002 Currencies of the Commonwealth of Nations Currencies of South America Currencies of the Caribbean Currencies of Zimbabwe Currencies of Finland