Euro

The history of the Euro

The development of the Euro originates from the preamble of The Treaty of Rome. In 1957, the Treaty aimed to achieve "an ever closer union among the peoples of Europe" by creating a unified European common market with economic prosperity. This goal was furthered by the Single European Act (1986) and the European Union Maastricht Treaty (1992), which introduced the Economic and Monetary Union (EMU) with the ultimate aim of introducing a single currency. This occurred in December 1995 at an EU summit in Madrid when the dates to introduce the single monetary unit were fixed.

On January 1, 1999 the Euro became the official currency for more than 300 million people in Europe. It was first introduced as an accounting or electronic currency in 2001 (ECU), and in 2002 became legal tender in 12 EU member states. Within the next few months participating countries phased out their existing currencies - and for the most part the transition was smooth. Based on the market rates of 31 December 1998, the Council of the European Union set the conversion rates for one € equal to:

1.95583 German marks
6.55957 French francs
1936.27 Italian lira
166.386 Spanish pesetas
200.482 Portuguese escudos
5.94573 Finnish markka
0.787564 Irish punts
40.3399 Belgian/Luxembourg francs
2.20371 Dutch guilders
13.7603 Austrian schillings
340.750 Greek drachmas

The European Central Bank (ECB) in Frankfurt controls the Euro monetary policy, while the European System of Central Banks (ESCB) is responsible for printing, minting, and distributing the currency. The Eurosystem is composed of the ECB and the national banks of the 12 participating EU countries. The ECB aims to maintain stability of the Euro, ensure growth and keep inflation low.

Participating Members:

The Euro is currently the official currency in 13 countries: Austria, Belgium, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain. Together they form the Eurozone, which is also known as 'euroland' or the 'euro group'. The Eurozone's overseas territories of French Guiana, Réunion, Saint-Pierre et Miquelon, Guadeloupe, Martinique and Mayotte have also adopted the Euro as their legal currency. Non-EU member state Montenegro, the principality of Andorra, and the UN administered province of Kosovo have also adopted the Euro as their currency.

EU member states, Sweden, Denmark and The UK have, however, chosen not to adopt the Euro - Britain and Denmark negotiated an opt-out clause from the single currency and Sweden rejected the Euro in a referendum in 2003. The other more recent members to join the EU in 2004 are expected to switch over to the Euro between 2007 and 2012. Slovenia was the first to do so in January 2007.