The Euro - Europe’s single currency

The euro as a worldwide currency
The euro is the single currency for more than 320 million Europeans and directly affects close to 500 million people worldwide. It is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar. The euro, which replaced the former European Currency Unit (ECU), was introduced to world financial markets as an accounting currency in 1999 and launched as physical banknotes and coins on 1 January 2002.

Euro administration
The euro is managed and administered by the European Central Bank (setting monetary policy) based in Frankfurt and the Eurosystem composed of the central banks of the euro zone countries (it participates in the printing, minting and distribution of notes and coins in all member states).

The euro has already been adopted by 15 different member states, Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain, which altogether form the Eurozone – the largest economy in the world by March 2008. It is also the legal currency of the French overseas possessions of French Guiana, Réunion, Saint-Pierre et Miquelon, Guadeloupe, Martinique, Saint-Barthélemy, Saint Martin, Mayotte, uninhabited Clipperton Island and the French Southern and Antarctic Lands; the Portuguese autonomous regions of the Azores and Madeira; and the Spanish Canary Islands. In addition, three European microstates, (the Vatican City, Monaco, and San Marino), have adopted the euro due to currency connections with member states even though they are not EU members. The value of the Cape Verdean escudo, the Bosnia and Herzegovina convertible mark, the CFP franc, the CFA franc and the Comorian franc (non-EU currencies) have all been pegged to the euro.

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On 7 May 2008, the European Central Bank stated that Slovakia is ready to join the eurozone from 1 January 2009 with the conversion rate set at 30.1260 adopted on 8 July 2008. While all European Union member states are eligible to join if they comply with specific monetary requirements, not all EU members, amongst which number the United Kingdom, Denmark and Sweden, have chosen to adopt the currency. In spite of this, many banks in the United Kingdom report that as much as 90% of their international trade is conducted in euro, which has become their core currency on international business systems.

Euro designs and denominations
All circulating euro coins have a common side designed by Luc Luycx, showing the denomination and the old 15 EU countries in the background, and a national side with an image specifically chosen by the issuing country. The coins are produced in €2, €1, 50-cent, 20-cent, 10-cent, 5-cent, 2-cent and 1-cent denominations. The design for the euro banknotes has common images on both sides. Notes are issued in €500, €200, €100, €50, €20, €10 and €5 denominations. Each banknote has its own colour and is dedicated to an artistic period of European architecture.

The euro and its non-physical form
Economists who helped create or contributed to the creation of the euro include Robert Mundell, Wim Duisenberg, Robert Tollison, Neil Dowling, Fred Arditti and Tommaso Padoa-Schioppa.

The currency was also introduced in non-physical form as travellers' cheques, electronic transfers, banking, etc. at midnight on 1 January 1999, when the national currencies of participating countries ceased to exist independently in that their exchange rates were locked at a fixed rate against each other.

By Beata Pašková
Photo: Fotolia

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