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What is the Euro?

Updated on November 20, 2013

The Euro as a currency came into effect in January 2002, it became legal tender in a number of European countries as their own national currency was withdrawn. The Euro was to become the single currency of the common market and would bring member states closer together. No longer would the holiday maker's of Europe have to exchange their French Franc's to get Italian Lira when they took their vacation.

The bureaucracy and red tape of European trade would be removed and economies would remain more fluid.The Euro represented a removal of another obstacle to full European integration and an end to historic rivalries and hatreds. The Euro was also designed to be a rival to the mighty US Dollar and the Euro was modeled on much of the Dollar's successful points.

A German Euro Coin
A German Euro Coin | Source

The Origin of the Euro

The Euro was first proposed in the Maastricht Treaty of 1992, and only two of the European Union's member's at that time opted out of it. Of the 27 members of the Eurozone, there are 17 countries that use the Euro as their primary currency. Denmark, Great Britain and Sweden are the most notable members not to use the European currency.

All new member states of the European Union must join the Euro currency at some point of their membership, the option of "opting out" was reserved for the established member's. If you want to be part of the European Union, you have to accept the Euro.

What are the conditions of membership?

Before a European member State can adopt the Euro, it must fulfill certain economic and legal criteria. The economic " convergence criteria" is designed to ensure that a member State's economy is sufficiently prepared for adoption of the single currency. The applicant State must shoe it can integrate smoothly into the monetary system of the Eurozone. They also require that national legislation, in particular the national central bank and monetary issues, are compatible with the Treaty.

What happened to the old Currency?

When the Euro became legal tender in 2002, the States that signed up had to exchange their national currency for the new Euro. The replaced currencies were given individual time frames to remain legal tender. Many of the Euro countries will still accept their old currency in Bank's for the foreseeable future but will only pay out in Euro currency. No country in the Euro will continue to print or mint their old currency though.

The European Central Bank in Frankfurt, Germany.
The European Central Bank in Frankfurt, Germany. | Source

Current European countries in the Euro.

Former Currency

Where is the Euro printed and minted?

There are currently 17 mint's that are authorized to print or mint the Euro currency, Five of these Mints are in Germany. Each member State of the Euro can display a National design on one side of the Euro, while the flip side will show the map of the European Union.

Positive points of the Euro

The adoption of the Euro will offer the new member's these benefits...

  • As a single entity the European Union and it's united Euro currency could overtake the power of the American Dollar. This is theory should increase the trading ability of the Eurozone States, and operate the same as US States behave in their union.
  • Less expense and paperwork when trading with fellow European States.
  • The ability to weather financial crisis as a single unit
  • A consistent and solid system of Banking
  • Budgets of the member States will be sensible and economies will be synchronised.

Negative points of the Euro

Critics of the Euro believe the currency has a negative impact because of,,,

  • A fixed interest rate means National economies cannot take action to prevent problems escalating.
  • The European Central Bank is less interested in financial growth and too fearful of inflation.
  • The Euro operates a one size fit's all approach to the Eurozone economy, it makes no allowances in comparing a dominant economy such as Germany against a weaker economy such as Greece.
  • The elected members of the ECB look after their own countries interests over that of the whole Eurozone.

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Will the Euro still exist in 2113?

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The future of the Euro

The short term future is dependent on the European Central Banks ability to keep the economies of weaker nations within the Euro. To lose member's such as Greece, Portugal, Ireland or Spain would leave the whole of Europe in an awkward position. It would lead to the likely establishment of a multiple tier system of membership for Europe as a whole. There would be those States that could follow the European dream to the finish line such as Germany and France, those countries that are out of the Euro but closely tied to it such as Great Britain and Denmark and another level who have been left severely damaged by been unable to adhere to the Euro's economic guidelines. The stronger economies may have to support the weaker economies until the recession and debt crisis is resolved.

Long term the Euro will be firmly established as so much time and effort has been invested in the program, Germany and France are the powerhouses of European finance and as long as they remain committed to the program the Euro will survive in one form whatever the crisis. It is highly unlikely the Franco-German nations will return to their respective former currencies. The big question is if other nations leave the Euro, will it make other nations question the Euro's worth on a global scale.


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    • Asp52 profile image

      Andrew Stewart 4 years ago from England

      Thank you, I believe if the economies are similar then it is a good idea in principle. At present Greece, Italy, Germany and France have different needs.

    • profile image

      Howard Schneider 4 years ago from Parsippany, New Jersey

      Excellent informational Hub, Asp52. I believe the keeping of all the European nations utilizing the Euro as their currency is key to the strength of the European Union and will ensure its future economic strength.