The euro is the official currency for the Eurozone. At the time of writing, the Eurozone is comprised of 19 of the 28 members of the European Union. There are also a handful of nations and territories that use the euro as their official or de facto currency even though they are not members of the European Union.
The euro is sold freely and has a fluctuation value vis-à-vis other currencies. Since 2010, the euro has undergone a sharp decline in value against most of the other major currencies, including the USD. For the year 2008, the average exchange rate was 1.60 USD for 1 EUR. By March 2015, the exchange rate was 1.06 USD for 1 EUR.
The euro is currently the second most traded currency on the forex market; only the USD is more traded. Statics for the year 2013 show that the most traded currency pair on the forex market was EURUSD, comprising over 24% of the total trade. (Source: The 2013 Triennial Central Bank Survey). Out of all forex transactions, the euro was present in over 33% of them for the year 2013.
The euro is a very popular reserve currency, with only the United States Dollar being more popular.
EUR, USD, GBP and JPY are the four currencies that form the currency basket used by the International Monetary Fund (IMF) to calculate the value of IMF:s special drawing rights.
Facts about the euro
- The central bank for the euro is the European Central Bank (ECB) in Frankfurt.
- The ISO-4217 currency code for the euro is EUR.
- The symbol € denotes the euro.
- Euro money has never been commodity money or representative money. There has never been a gold standard for euro. Euros are fiat money.
- 1 euro consists of 100 cents.
- The name euro is usually pronounced [‘ɛvrʊ] or [ˈɛuɾʊ], i.e. ev-ro or you-ro.
- In August 2014, the total value of euro coins and euro bills in circulation was €995 billion. This was more than the total value of all USD coins and USD bills in circulation at the time.
Monetary policy and the issuing of euro
The euro (then called the European Currency Unit or ECU) was introduced as electronic unit of account on January 1, 1999. At this time, it was not yet a full currency and had no physical coins or bills. Physical euro coins and bills came into circulation on January 1, 2002.
According to the Maastricht Treaty of 1992 (Treaty on European Union), membership states of the European Union are obliged to adopt the euro as their official currency as soon as they meet certain criteria. The United Kingdom and Denmark has negotiated exceptions from this rule and does not have to adopt the euro even if they meet the criteria. Sweden has not negotiate any exception, and stays out of the Eurozone by deliberately not meeting the criteria.
Monetary policy for the euro is set by the European Central Bank (ECB) in Frankfurt. ECB has traditionally focused on keeping interest rates very low.
The practical tasks of minting euro coins, printing euro bills and handling transaction systems falls under the auspices of the Eurosystem. The Eurosystem is comprised by the central banks of the Eurozone countries. Countries and territories that use the euro as their official currency without being a part of the Eurozone are not represented within the Eurosystem and is thus not allowed to mint their own euro coins or print their own euro bills.
Nations and territories where euro is the official currency
|Within the European Union||Outside the European Union|
Akrotiri and Dhekelia
French Southern and Antarctic lands