The euro, often signified by €EUR, is the currency used in 12 members of the European Union, as well as regions such as Montenegro, Kosovo, Andorra and more. The euro is the result of the most significant monetary reform in Europe since the Roman Empire. While creation of this currency is most obviously a channel through which Europe may perfect a single market (by facilitating free trade between members of the Eurozone), the euro is just as importantly a means through which Europe may achieve political integration.
Although the euro was only formally put into circulation on January 1, 2002, the idea of creating "an ever closer union among the peoples of Europe" has been around for decades-as stated in the Treaty of Rome in 1957. In 1979, the European Monetary System (EMS) was introduced and locked exchange rates among participating countries, which aided efforts to stabilize the economy. In 1992, the Economic and Monetary Union (EMU) was formed which set the basics for the creation of the single currency. Seven years later on January 1, 1999-the euro was born when the participating countries established exchange rates between their own currencies and the euro creating a monetary union. It took three years of transition, where the euro was only used as electric money, until actual euro notes and coins were used. Now, the 12 euro area member states have a single currency, a common interest rate, and a common central bank (European System of Central Banks.) It is the largest monetary replacement the world has ever seen.
The euro is administered by the European System of Central Banks (ESCB), which is comprised of the European Central Bank (ECB) and the Eurozone central banks. Headquartered in Frankfurt, Germany, the ECB has the sole authority to set monetary policy; other members of the ESCB participate through printing, minting, and distributing notes and coins.
Where is the Euro Used?
The countries in the European Union that use the euro are:
Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal, Finland
Where is the NOT Euro Used?
EU countries not using the euro are: Denmark, Sweden, and the U.K.
Other territories using the euro are: Andorra, Monaco, San Marino, The Vatican, Martinique, Guadalupe (Caribbean), Reunion (Indian Ocean), Montenegro,Kosovo
What does it look like?
The European Union (EU) is comprised of 25 democratic states. It was established in 1992 by the Treaty on European Union and is headquartered in Brussels. The members of the EU are: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, The Netherlands and the United Kingdom. All decisions and procedures in the EU are based on treaties agreed upon by these countries. Since its establishment, people, goods, services and money are free to move throughout the union as if it were one country.
Key Economic Factors
US Trade Balance Report: Analyzing the value of the euro currency against that of the U.S. dollar, a major factor that influences the relative values is the US Trade Balance Report. Released monthly, the EUR/USD value is dependent upon whether the deficit expands or contracts. The EUR/USD value is likely to travel in the same direction the deficit amount does (i.e. if the deficit increases, the euro will increase in value relative to the U.S. dollar).
Many people are watching Europe's economy very closely. The growth of the union is much slower as compared to the surrounding economies.
Swiss unemployment has been a problem for the euro. In June 2005, the rates stood at 3.8% with high youth unemployment and long-term joblessness as significant problems.
Germany has been on a rebound in 2005 in regards to manufacturing orders. The Purchasing Manager's Index revealed that the number of new export orders has increased. However, industrial production as well as domestic economic activity has been on the decline.
- Other Currencies Accepted: None
- Currency Peg:No
- Black Market for Currency:N/A
- Currency Volatility:N/A
- Estimated GDP Per Capita:26,900 USD (2004)