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Glossary of summaries

Euro

The euro is the single currency used today by 21 Member States of the European Union (EU), which together make up the euro area. The Member States in question are Belgium, Bulgaria, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland. These countries need to coordinate their economic policies very closely, with the common objective of stability and growth. This is done on an ongoing basis and by means of monthly meetings of the Eurogroup where issues of common concern for the euro area are discussed and coordinated.

The euro was established by the Treaty on European Union, which sets out that one of the aims of the EU is to establish an economic and monetary union with the euro as its currency. In accordance with the EU treaties, all Member States (with the exception of Denmark, which has opted out) are expected to adopt the euro once they fufill the convergence criteria. Simply put, these criteria require that their rate of inflation, public finances, exchange rate and long-term interest rates need to broadly converge with those of the three best-performing euro-area countries. The convergence criteria seek to ensure that a Member State joining the euro area can demonstrate stability and integrate smoothly into the monetary union.

The name ‘euro’ was adopted by the European Council at its meeting in Madrid on 15 and .

The euro as a currency was introduced in two phases.

Phase One

On , 11 Member States fixed their exchange rates, transferred the responsibility for the implementation of a single monetary policy under the auspices of the European Central Bank to the European System of Central Banks (ESCB) and adopted the euro as their single currency. The euro was initially an electronic currency used by financial markets and for cashless payments.

Phase Two

In 2002, euro banknotes and coins entered into circulation, and subsequently the euro has been adopted by more Member States as their currency.

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