The History, Usage, and Value of the European Euro

The euro is the official currency of the Institutions of the European Union, an organization that includes 18 European countries. A handful of other states have permission to use the currency as well. Considering the significance of the euro in the global economy and to the many people who use it, it’s important to understand the history, usage, and value of this currency.

History

1992: The Treaty on European Union (TEU) first conceived of an international currency. This was intended to create ease of travel and exchange for the geographically and politically close countries involved, as well as lend an economic advantage to each country.

The TEU created strict guidelines for those interested in participating in a shared currency: countries had to have a budget deficit of under three percent of their GDP, low inflation, and interest rates similar to the average European Union rate, among other ground rules.

1995: the name “euro” was officially adopted for this proposed currency.

1999: the euro was introduced in general banking as traveller’s checks and electronic transfers. However, physical forms of the money had yet to be released.

2001coins and bills were distributed around the EU, although the currency was not yet viable in physical transactions.

2002: January 1 was the first day of the currency’s physical use. February was the last month in which old forms of individual countries’ currencies could be used instead of the euro.

Usage

Some 334 million people currently use the euro in 18 official countries. Another 210 million people use currencies that have a fixed exchange rate with the euro. The euro is also the second most highly traded currency in the world, with the American dollar leading the list. However, the euro has the highest combined value of notes and coins in circulation, followed by the US dollar. Notably, the United Kingdom refused to adopt the euro, along with Denmark.

Value

When first introduced, the euro had a value of approximately US$1.17; however, within two years it dropped to a value of only around 83 cents. In 2014, the euro is valued at US$1.39, which means, of course, it now has a higher value than the US dollar.

The euro is a widely used currency that operates within a large political and geographic area. Its current value is higher than that of the American dollar, although more people still use the dollar today.