Euro
The euro (symbol: €; currency code: EUR) is the official currency of 20 of the 27 member states of the European Union. This group of states is officially known as the euro area or, more commonly, the eurozone. The euro is divided into 100 euro cents.[6][7]
This article is about the currency. For other uses, see Euro (disambiguation). "EUR" redirects here. For other uses, see EUR (disambiguation).see also euro in various languages
EUR (numeric: 978)
0.01
euro
Varies, see language and the euro
€
The single currency[a]
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1 January 1999
primary: § members of Eurozone (20),
also: § other users
2.4% (March 2024)[5]
The currency is also used officially by the institutions of the European Union, by four European microstates that are not EU members,[7] the British Overseas Territory of Akrotiri and Dhekelia, as well as unilaterally by Montenegro and Kosovo. Outside Europe, a number of special territories of EU members also use the euro as their currency. Additionally, over 200 million people worldwide use currencies pegged to the euro.
The euro is the second-largest reserve currency as well as the second-most traded currency in the world after the United States dollar.[8][9][10][11][12] As of December 2019, 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.[13][14]
The name euro was officially adopted on 16 December 1995 in Madrid.[15] The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit (ECU) at a ratio of 1:1 (US$1.1743 at the time). 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.[16]
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.[17]
Finland
: The government of Bulgaria aims to replace the Bulgarian lev by the euro on 1 January 2025.[27] In November 2023, Bulgarian euro coin design has been revealed and approved by the Bulgarian National Bank.[28][29]
Bulgaria
Czech Republic
Hungary
Poland
Romania
Sweden
Exchange rates[edit]
Flexible exchange rates[edit]
The ECB targets interest rates 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 results in a depreciation of the currency. In the years following the Single European Act, the EU has liberalised its capital markets and, as the ECB has inflation targeting as its monetary policy, the exchange-rate regime of the euro is floating.
Against other major currencies[edit]
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, 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 European sovereign-debt crisis the euro remained stable.[116] 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.[117] In mid July, 2022, the euro equalled the US dollar for a short period of time.[17]
Political considerations[edit]
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,[118] Laurent Fabius, French Finance Minister, in 2000,[119] and Romano Prodi, President of the European Commission, in 2002.[120] However, 15 years after the introduction of the euro, a study found no evidence that it has had any effect on a shared sense of European identity.[121]