Euro

Colonial and Continental Currency

The euro is the official currency of fifteen member states of the European Union (EU). The states, known collectively as the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain. The currency is also used in five further countries with formal agreements and six other countries without such agreements. Hence it is the single currency for over 320 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects close to 500 million people worldwide. With more than Ђ610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar (USD).

Based on official estimates of 2007 GDP and purchasing power parity among the various currencies, the Eurozone is the largest economy in the world. The euro was introduced to world financial markets as an accounting currency in 1999 and launched as physical coins and banknotes on 1 January 2002. It replaced the former European Currency Unit (ECU) at a ratio of 1:1.

The euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the euro zone countries). As an independent central bank, the ECB has sole authority to set monetary policy. 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 Maastricht Treaty of 1993 obliged all then-current members of the EU to adopt the euro upon meeting certain monetary and budgetary requirements, however, not all states have done so. The United Kingdom and Denmark negotiated exemptions. Sweden turned down the euro in a 2003 referendum, 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 the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. In addition, three European microstates (Vatican City, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Three other European states Andorra, Montenegro, and Kosovo have adopted the euro unilaterally, while not being EU members either (see Eurozone).

Coins and banknotes

The euro is divided into 100 cents (sometimes referred to as euro-cents, especially when distinguishing them from other currencies). Although it departs from usual English practice, euro and cent are used both for singular and plural in existing legislation. Otherwise, normal English plurals are recommended and used. All circulating coins (including the Ђ2 commemorative coins) have a common side showing the denomination (value) with the old 15 EU-countries in the background. This common side was designed by Luc Luycx. From 2007 or 2008 on (depending on the country where the coin is issued) that “old” map is replaced by a map of Europe, thus also showing non-EU-members like Norway. The coins also have a national side showing an image specifically chosen by the country that issued the coin. Euro coins from any country may be freely used in any nation which has adopted the euro. The coins are issued in Ђ2, Ђ1, 50-cent, 20-cent, 10-cent, 5-cent, 2-cent, and 1-cent denominations. In the Netherlands, some, and in Finland, by law, cash transactions are rounded to the nearest five cents, to avoid the use of the two smallest coins.

Coins have a common side, and a national side designed by the respective national authorities. Commemorative coins with Ђ2 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 Ђ2 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’s 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.

The design for the euro banknotes have common designs on both sides. Notes are issued in Ђ500, Ђ200, Ђ100, Ђ50, Ђ20, Ђ10, Ђ5. Each banknote has its own colour and is dedicated to an artistic period of European architecture. The front (recto) of the note features windows or gateways while the back (verso) has bridges. Care has been taken so that the architectural examples do not represent any actual existing monument, so as not to induce jealousy or controversy in the choice of monuments. Some of the highest denominations such as the Ђ500 are not issued in all countries, though they remain legal tender throughout the Eurozone.