Questions About the Euro?

The Euro is the common currency of the European Monetary Union adopted by 11 EU (European Union) member states on January 1, 1999. It is a single currency shared by the participating nations of Belgium, Germany, Spain, France, Ireland, Italy, Luxemburg, the Netherlands, Austria, Portugal and Finland. The four other members of the European Union are not participating in this first round of adopting the Euro. Great Britain, Denmark and Sweden have opted out for the time being, while Greece was not able to meet the budgetary requirements set by the EU.

The fixed rates shown on the previous page were set by the EU Council on January 1, 1999. The value of the currencies of the participating nations are now pegged to the Euro and will no longer fluctuate as independent currencies. They are proxy Euros simply subdivided into 11 sections as there still do not exist Euro notes and coins. Such paper currency notes and coins will be introduced on January 1, 2002 where there will be a 6 month transition in replacing the 11 different circulating currencies with Euro legal tender.

The Euro is convenient for several reasons. It provides for transparency in pricing, i.e. it becomes simple to compare prices from across Europe. Costs are reduced as exchange commissions no longer have to be paid when trading between nations occurs. Time is saved in not having to translate prices into other currencies or looking for the best rates of exchange available. Also, and most importantly, national economies are no longer vulnerable to the volatility of their currency when trading with their European partners.

As of January 1, 1999 people can have bank accounts and credit card accounts in Euros. Any payments not involving cash can be made in Euros, even if one is paying from an account still denominated by a national currency of one of the 11 participating states. All transfer payments, financial transactions and market transactions will be conducted in Euros.

If you want to know more about the Euro and its implications, you can click on one of the links on the previous page for more information.