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currentness of most countries in the European Union
This article is about the currency. For other uses, see Euro ( disambiguation )
The euro ( symbol : € ; code : EUR ) is the official currency of 19 of the 27 extremity states of the European Union. This group of states is known as the eurozone or euro sphere and includes about 343 million citizens as of 2019. [ 15 ] [ 16 ] The euro, which is divided into 100 cents, is the second-largest and second-most trade currentness in the extraneous exchange market after the United States dollar. [ 17 ]

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The currency is besides used officially by the institutions of the European Union, by four european microstates that are not EU members, [ 16 ] the british Overseas Territory of Akrotiri and Dhekelia, deoxyadenosine monophosphate well as unilaterally by Montenegro and Kosovo. Outside Europe, a number of special territories of EU members besides use the euro as their currentness. additionally, over 200 million people worldwide consumption currencies pegged to the euro. The euro is the second-largest reservation currency a well as the second-most traded currency in the world after the United States dollar. [ 18 ] [ 19 ] [ 20 ] As of December 2019, with more than €1.3 trillion in circulation, the euro has one of the highest aggregate values of banknotes and coins in circulation in the populace. [ 21 ] [ 22 ] The name euro was officially adopted on 16 December 1995 in Madrid. [ 23 ] The euro was introduced to world fiscal markets as an accounting currentness on 1 January 1999, replacing the early european Currency Unit ( ECU ) at a ratio of 1:1 ( US $ 1.1743 ). physical euro coins and banknotes entered into circulation on 1 January 2002, making it the daily operate currency of its original members, and by March 2002 it had wholly replaced the former currencies. [ 24 ] While the euro dropped subsequently to US $ 0.83 within two years ( 26 October 2000 ), it has traded above the U.S. dollar since the goal of 2002, peaking at US $ 1.60 on 18 July 2008 and since then returning near to its original issue rate. In late 2009, the euro became immersed in the european sovereign-debt crisis, which led to the creation of the european Financial Stability Facility deoxyadenosine monophosphate good as other reforms aimed at stabilising and strengthening the currency .

administration [edit ]

The euro is managed and administered by the Frankfurt -based european Central Bank ( ECB ) and the Eurosystem ( composed of the cardinal banks of the eurozone countries ). As an mugwump central bank, the ECB has sole agency to set monetary policy. The Eurosystem participates in the print, mint and distribution of notes and coins in all extremity states, and the operation of the eurozone requital systems. The 1992 Maastricht Treaty obliges most european union extremity states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, although not all states have done so. Denmark has negotiated exemptions, [ 25 ] while Sweden ( which joined the EU in 1995, after the Maastricht Treaty was signed ) turned down the euro in a non-binding referendum in 2003, and has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. The Maastricht Treaty was later amended by the Treaty of Nice, [ 26 ] which closed the gaps and loopholes in the Maastricht and Rome Treaties .

Issuing modalities for banknotes [edit ]

Since 1 January 2002, the national central banks ( NCBs ) and the ECB have issued euro banknotes on a joint footing. [ 27 ] Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated. The ECB issues 8 % of the full measure of banknotes issued by the Eurosystem. [ 27 ] In commit, the ECB ‘s banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB. These liabilities carry matter to at the chief refinance rate of the ECB. The other 92 % of euro banknotes are issued by the NCBs in proportion to their respective shares of the ECB capital key, [ 27 ] calculated using national share of European Union ( EU ) population and home share of EU GDP, evenly weighted. [ 28 ]

Characteristics [edit ]

Coins and banknotes [edit ]

The euro is divided into 100 cents ( besides referred to as euro cents, specially when distinguishing them from other currencies, and referred to as such on the park side of all penny coins ). In Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding convention english use. [ 29 ] [ 30 ] Otherwise, normal english plurals are used, [ 31 ] with many local variations such as centime in France. All circle coins have a common side showing the denomination or value, and a map in the background. Due to the linguistic battalion in the European Union, the Latin alphabet adaptation of euro is used ( as opposed to the less coarse Greek or Cyrillic ) and Arabic numerals ( other text is used on national sides in national languages, but other text on the common side is avoided ). For the denominations except the 1-, 2- and 5-cent coins, the map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 ( depending on the country ), the old map was replaced by a map of Europe besides showing countries outside the EU like Norway, Ukraine, Belarus, Russia and Turkey. [ citation needed ] The 1-, 2- and 5-cent coins, however, keep their old plan, showing a geographic map of Europe with the 15 penis states of 2002 raised reasonably above the rest of the map. All coarse sides were designed by Luc Luycx. The coins besides have a national side showing an trope specifically chosen by the country that issued the coin. Euro coins from any member state may be freely used in any nation that has adopted the euro. The coins are issued in denominations of €2, €1, 50c, 20c, 10c, 5c, 2c, and 1c. To avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands and Ireland [ 32 ] [ 33 ] ( by voluntary agreement ) and in Finland ( by law ). [ 34 ] This commit is discouraged by the mission, as is the drill of certain shops of refusing to accept high-value euro notes. [ 35 ] commemorative coins with €2 confront value have been issued with changes to the purpose of the national side of the coin. These include both normally issued coins, such as the €2 commemorative mint for the fiftieth anniversary of the sign of the Treaty of Rome, and nationally write out coins, such as the coin to commemorate the 2004 Summer Olympics issued by Greece. These coins are legal tender throughout the eurozone. Collector coins with versatile other denominations have been issued as well, but these are not intended for general circulation, and they are legal tender only in the member state that issued them. [ 36 ] The design for the euro banknotes has coarse designs on both sides. The design was created by the austrian designer Robert Kalina. [ 37 ] Notes are issued in €500, €200, €100, €50, €20, €10, €5. Each bill has its own color and is dedicated to an artistic period of european architecture. The presence of the note features windows or gateways while the spinal column has bridges, symbolising links between states in the union and with the future. While the designs are supposed to be barren of any identifiable characteristics, the initial designs by Robert Kalina were of specific bridges, including the Rialto and the Pont de Neuilly, and were subsequently rendered more generic ; the final examination designs hush bear identical airless similarities to their particular prototypes ; therefore they are not rightfully generic. The monuments looked similar adequate to different home monuments to please everyone. [ 38 ] The Europa series, or second series, consists of six denominations and no longer includes the €500 with issue discontinued as of 27 April 2019. [ 39 ] however, both the first and the second series of euro banknotes, including the €500, remain legal affectionate throughout the euro area. [ 39 ] In December 2021, the ECB announced it plans to redesign euro banknotes by 2024. A theme advisory group, made up of one member from each euro area country, was selected to submit theme proposals to the ECB. The proposals will be voted on by the populace ; a plan contest will besides be held. [ 40 ]

Payments clear, electronic funds transfer [edit ]

capital within the EU may be transferred in any sum from one state to another. All intra-Union transfers in euro are treated as domestic transactions and bear the equate domestic transmit costs. [ 41 ] This includes all member states of the EU, even those outside the eurozone providing the transactions are carried out in euro. [ 42 ] Credit/debit card charging and ATM withdrawals within the eurozone are besides treated as domestic transactions ; however paper-based requital orders, like cheques, have not been standardised so these are still domestic-based. The ECB has besides set up a clear system, TARGET, for bombastic euro transactions. [ 43 ]

Currency polarity [edit ]

The euro sign ; logotype and handwritten A extra euro currency gestural ( € ) was designed after a populace survey had narrowed the master ten proposals down to two. The european Commission then chose the plan created by the belgian Alain Billiet. Of the symbol, the Commission stated [ 29 ]

inhalation for the € symbol itself came from the greek epsilon ( Є ) [ note 6 ] – a mention to the rocker of european civilization – and the inaugural letter of the word Europe, crossed by two parallel lines to ‘certify ‘ the stability of the euro .European Commission

The european Commission besides specified a euro logo with exact proportions and foreground and background discolor tones. [ 44 ] Placement of the currency signboard relative to the numeral come varies from department of state to express, but for text in English the symbol ( or the ISO -standard “ EUR ” ) should precede the measure. [ 45 ]

history [edit ]

introduction [edit ]

The euro was established by the provisions in the 1992 Maastricht Treaty. To participate in the currency, penis states are meant to meet stern criteria, such as a budget deficit of less than 3 % of their GDP, a debt ratio of less than 60 % of GDP ( both of which were ultimately widely flouted after initiation ), depleted inflation, and interest rates close up to the EU average. In the Maastricht Treaty, the United Kingdom and Denmark were granted exemptions per their request from moving to the stage of monetary union which resulted in the introduction of the euro. The mention “ euro ” was officially adopted in Madrid on 16 December 1995. [ 23 ] belgian Esperantist Germain Pirlot, a former teacher of french and history is credited with naming the newly currency by sending a letter to then President of the european Commission, Jacques Santer, suggesting the name “ euro ” on 4 August 1995. [ 47 ] due to differences in national conventions for rounding and meaning digits, all conversion between the national currencies had to be carried out using the action of triangulation via the euro. The definitive values of one euro in terms of the exchange rates at which the currentness entered the euro are shown on the right. The rates were determined by the Council of the European Union, [ note 7 ] based on a recommendation from the European Commission based on the marketplace rates on 31 December 1998. They were set thus that one european Currency Unit ( ECU ) would equal one euro. The european Currency Unit was an accounting unit used by the EU, based on the currencies of the penis states ; it was not a currentness in its own right. They could not be set earlier, because the ECU depended on the close rally rate of the non-euro currencies ( chiefly the irish pound sterling ) that day. The procedure used to fix the conversion rate between the Greek drachma and the euro was different since the euro by then was already two years old. While the conversion rates for the initial football team currencies were determined entirely hours before the euro was introduced, the conversion rate for the Greek dram was fixed several months ahead. [ note 8 ] The currency was introduced in non-physical phase ( traveler ‘s cheques, electronic transfers, bank, etc. ) at midnight on 1 January 1999, when the national currencies of participating countries ( the eurozone ) ceased to exist independently. Their exchange rates were locked at fix rates against each other. The euro frankincense became the successor to the european Currency Unit ( ECU ). The notes and coins for the old currencies, however, continued to be used as legal tender until new euro notes and coins were introduced on 1 January 2002. The conversion menstruation during which the early currencies ‘ notes and coins were exchanged for those of the euro lasted about two months, until 28 February 2002. The official date on which the national currencies ceased to be legal tender varied from member submit to penis state. The earliest date was in Germany, where the target formally ceased to be legal tender on 31 December 2001, though the exchange period lasted for two months more. even after the previous currencies ceased to be legal tender, they continued to be accepted by national central banks for periods ranging from several years to indefinitely ( the latter for Austria, Germany, Ireland, Estonia and Latvia in banknotes and coins, and for Belgium, Luxembourg, Slovenia and Slovakia in banknotes entirely ). The earliest coins to become non-convertible were the portuguese portuguese escudo, which ceased to have monetary value after 31 December 2002, although banknotes remain exchangeable until 2022 .

Eurozone crisis [edit ]

Budget deficit of the eurozone compared to the United States and the UK. Following the U.S. fiscal crisis in 2008, fears of a autonomous debt crisis developed in 2009 among investors concerning some european states, with the situation becoming particularly strain in early on 2010. [ 48 ] [ 49 ] Greece was most acutely affect, but fellow Eurozone members Cyprus, Ireland, Italy, Portugal, and Spain were besides significantly affected. [ 50 ] [ 51 ] All these countries utilized EU funds except Italy, which is a major donor to the EFSF. [ 52 ] To be included in the eurozone, countries had to fulfil certain overlap criteria, but the meaningfulness of such criteria was diminished by the fact it was not enforced with the like level of strictness among countries. [ 53 ] According to the Economist Intelligence Unit in 2011, “ [ I ] f the [ euro sphere ] is treated as a single entity, its [ economic and fiscal ] position looks no worse and in some respects, rather better than that of the US or the UK ” and the budget deficit for the euro area as a unharmed is a lot lower and the euro area ‘s government debt/GDP ratio of 86 % in 2010 was about the same level as that of the United States. “ furthermore ”, they write, “ private-sector obligation across the euro sphere as a whole is markedly lower than in the highly leverage Anglo-Saxon economies ”. The authors conclude that the crisis “ is vitamin a much political as economic ” and the solution of the fact that the euro area lacks the documentation of “ institutional gear ( and reciprocal bonds of solidarity ) of a state ”. [ 54 ] The crisis continued with S & P downgrading the credit evaluation of nine euro-area countries, including France, then downgrading the entire european Financial Stability Facility ( EFSF ) fund. [ 55 ] A historical parallel – to 1931 when Germany was burdened with debt, unemployment and austerity while France and the United States were relatively strong creditors – gained attention in summer 2012 [ 56 ] even as Germany received a debt-rating warn of its own. [ 57 ] [ 58 ] In the abiding of this scenario the euro serves as a hateful of quantitative crude accretion .

directly and indirect custom [edit ]

conduct custom [edit ]

The euro is the lone currentness of 19 EU penis states : Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. These countries constitute the “ eurozone “, some 343 million people in total as of 2018. [ 59 ] With all but one ( Denmark ) EU members obliged to join when economic conditions permit, together with future members of the EU, the expansion of the eurozone is set to continue. Outside the EU, the euro is besides the exclusive currentness of Montenegro and Kosovo and several european microstates ( Andorra, Monaco, San Marino and the Vatican City ) ampere well as in three oversea territories of France that are not themselves part of the EU, namely Saint Barthélemy, Saint Pierre and Miquelon, and the french Southern and Antarctic Lands. together this direct custom of the euro outside the EU affects about 3 million people. The euro has been used as a trade currency in Cuba since 1998, [ 60 ] Syria since 2006, [ 61 ] and Venezuela since 2018. [ 62 ] There are besides versatile currencies pegged to the euro ( see below ). In 2009, Zimbabwe abandoned its local anesthetic currency and used major currencies alternatively, including the euro and the United States dollar. [ 63 ]

Use as reserve currency [edit ]

Since its introduction, the euro has been the second most wide held external military reserve currency after the U.S. dollar. The share of the euro as a reserve currency increased from 18 % in 1999 to 27 % in 2008. Over this period, the share held in U.S. dollar fell from 71 % to 64 % and that held in RMB fell from 6.4 % to 3.3 %. The euro inherited and built on the status of the Deutsche Mark as the second most crucial modesty currency. The euro remains scraggy as a modesty currency in promote economies while fleshy in emerging and developing economies : according to the International Monetary Fund [ 64 ] the total of euro held as a allow in the world at the goal of 2008 was adequate to $ 1.1 trillion or €850 billion, with a share of 22 % of all currency reserves in promote economies, but a total of 31 % of all currency reserves in emerging and developing economies. The hypothesis of the euro becoming the first international allow currency has been debated among economists. [ 65 ] Former Federal Reserve Chairman Alan Greenspan gave his opinion in September 2007 that it was “ absolutely conceivable that the euro will replace the US dollar as reserve currency, or will be traded as an evenly authoritative reservation currentness ”. [ 66 ] In contrast to Greenspan ‘s 2007 judgment, the euro ‘s increase in the share of the cosmopolitan currency reserve basket has slowed well since 2007 and since the begin of the global credit crush related recess and european sovereign-debt crisis. [ 64 ]

Currencies pegged to the euro [edit ]

Eurozone

External adopters of the euro

Currencies pegged to the euro

Currencies pegged to the euro within constrict band

United States

Economics [edit ]

optimum currency area [edit ]

In economics, an optimum currency area, or region ( OCA or OCR ), is a geographic region in which it would maximise economic efficiency to have the entire region contribution a unmarried currency. There are two models, both proposed by Robert Mundell : the stationary expectations model and the international gamble sharing model. Mundell himself advocates the international risk sharing mannequin and therefore concludes in party favor of the euro. [ 69 ] however, evening before the initiation of the unmarried currency, there were concerns over diverging economies. Before the late-2000s recess it was considered improbable that a state of matter would leave the euro or the whole zone would collapse. [ 70 ] however the greek government-debt crisis led to former british Foreign Secretary Jack Straw claiming the eurozone could not last in its current class. [ 71 ] Part of the trouble seems to be the rules that were created when the euro was set up. John Lanchester, writing for The New Yorker, explains it :

The guiding principle of the currency, which opened for business in 1999, were supposed to be a dress of rules to limit a nation ‘s annual deficit to three per penny of gross domestic intersection, and the total accumulated debt to sixty per cent of G.D.P. It was a nice idea, but by 2004 the two biggest economies in the euro zone, Germany and France, had broken the rules for three years in a row. [ 72 ]

transaction costs and risks [edit ]

The most obvious benefit of adopting a single currency is to remove the monetary value of exchanging currentness, theoretically allowing businesses and individuals to consummate previously unprofitable trades. For consumers, banks in the eurozone must charge the same for intra-member cross-border transactions as strictly domestic transactions for electronic payments ( for example, credit rating cards, debit cards and cash machine withdrawals ). fiscal markets on the continent are expected to be far more liquid and flexible than they were in the by. The decrease in cross-border transaction costs will allow larger bank firms to provide a wider align of bank services that can compete across and beyond the eurozone. however, although transaction costs were reduced, some studies have shown that risk antipathy has increased during the last 40 years in the Eurozone. [ 74 ]

price parity [edit ]

Another effect of the common european currency is that differences in prices—in particular in price levels—should decrease because of the law of one price. Differences in prices can trigger arbitrage, i.e., inquisitive barter in a commodity across borders strictly to exploit the price differential. consequently, prices on normally traded goods are likely to converge, causing inflation in some regions and deflation in others during the transition. Some evidence of this has been observed in specific eurozone markets. [ 75 ]

Macroeconomic constancy [edit ]

Before the initiation of the euro, some countries had successfully contained inflation, which was then seen as a major economic problem, by establishing largely independent central banks. One such bank was the Bundesbank in Germany ; the european Central Bank was modelled on the Bundesbank. [ 76 ] The euro has come under criticism due to its regulation, lack of tractability and inflexibility towards sharing penis States on issues such as nominal interest rates. [ 77 ] Many national and bodied bonds denominated in euro are significantly more melted and have lower interest rates than was historically the case when denominated in national currencies. While increase liquidity may lower the noun phrase pastime rate on the bind, denominating the bond in a currency with low levels of inflation arguably plays a much larger function. A credible commitment to gloomy levels of inflation and a stable debt reduces the hazard that the value of the debt will be eroded by higher levels of inflation or default in the future, allowing debt to be issued at a lower noun phrase pastime pace. unfortunately, there is besides a price in structurally keeping inflation lower than in the United States, UK, and China. The consequence is that seen from those countries, the euro has become expensive, making european products increasingly expensive for its largest importers ; hence export from the eurozone becomes more unmanageable. In general, those in Europe who own large amounts of euros are served by senior high school stability and low inflation. A monetary union means states in that coupling lose the main mechanism of convalescence of their external competitiveness by weakening ( depreciating ) their currentness. When wages become besides high compared to productivity in exports sector then these exports become more expensive and they are crowded out from the market within a area and overseas. This drive fall of employment and output in the exports sector and precipitate of craft and current score balances. fall of output and employment in tradable goods sector may be offset by the emergence of non-exports sectors, particularly in construction and services. Increased purchases abroad and negative current account balance can be financed without a trouble american samoa retentive as credit is cheap. [ 78 ] The want to finance barter deficit weakens currency making exports mechanically more attractive in a area and abroad. A state of matter in a monetary union can not use sabotage of currency to recover its international competitiveness. To achieve this a state has to reduce prices, including wages ( deflation ). This could result in high unemployment and lower incomes as it was during european sovereign-debt crisis. [ 79 ]

Trade [edit ]

The euro increased price transparency and stimulated cross-border trade. [ 80 ] A 2009 consensus from the studies of the insertion of the euro concluded that it has increased trade within the eurozone by 5 % to 10 %, [ 81 ] although one survey suggested an increase of only 3 % [ 82 ] while another estimated 9 to 14 %. [ 83 ] however, a meta-analysis of all available studies suggests that the prevalence of positive estimates is caused by issue bias and that the underlie effect may be negligible. [ 84 ] Although a more holocene meta-analysis shows that publication diagonal decreases over time and that there are positive deal effects from the introduction of the euro, vitamin a long as results from before 2010 are taken into account. This may be because of the inclusion of the Financial crisis of 2007–2008 and ongoing integration within the EU. [ 85 ] Furthermore, older studies accounting for prison term drift reflecting general coherence policies in Europe that started before, and continue after implementing the common currency find no effect on deal. [ 86 ] [ 87 ] These results suggest that other policies aimed at european integration might be the source of observe increase in trade wind. According to Barry Eichengreen, studies disagree on the magnitude of the effect of the euro on trade, but they agree that it did have an effect. [ 80 ]

investment [edit ]

physical investment seems to have increased by 5 % in the eurozone due to the initiation. [ 88 ] Regarding foreign address investment, a discipline found that the intra-eurozone FDI stocks have increased by about 20 % during the inaugural four years of the EMU. [ 89 ] Concerning the effect on corporate investment, there is testify that the presentation of the euro has resulted in an increase in investment rates and that it has made it easier for firms to access financing in Europe. The euro has most specifically stimulate investing in companies that come from countries that previously had weak currencies. A learn found that the introduction of the euro accounts for 22 % of the investment pace after 1998 in countries that previously had a weak currency. [ 90 ]

inflation [edit ]

The presentation of the euro has led to extensive discussion about its possible consequence on ostentation. In the light term, there was a far-flung impression in the population of the eurozone that the introduction of the euro had led to an increase in prices, but this depression was not confirmed by general indices of inflation and other studies. [ 91 ] [ 92 ] A study of this paradox found that this was due to an asymmetrical consequence of the introduction of the euro on prices : while it had no consequence on most goods, it had an consequence on cheap goods which have seen their price round of golf up after the initiation of the euro. The study found that consumers based their beliefs on ostentation of those cheap goods which are frequently purchased. [ 93 ] It has besides been suggested that the alternate in small prices may be because anterior to the introduction, retailers made fewer up adjustments and waited for the presentation of the euro to do indeed. [ 94 ]

Exchange rate hazard [edit ]

One of the advantages of the adoption of a common currency is the reduction of the hazard associated with changes in currency central rates. [ 80 ] It has been found that the insertion of the euro created “ meaning reductions in market risk exposures for nonfinancial firms both in and outside Europe ”. [ 95 ] These reductions in market risk “ were concentrated in firms domiciled in the eurozone and in non-euro firms with a high fraction of extraneous sales or assets in Europe ” .

fiscal integration [edit ]

The presentation of the euro increased european fiscal integration, which helped stimulate increase of a european securities market ( chemical bond markets are characterized by economies of scale dynamics ). [ 80 ] According to a study on this question, it has “ importantly reshaped the European fiscal system, specially with respect to the securities markets [ … ] however, the real and policy barriers to consolidation in the retail and corporate deposit sectors remain meaning, tied if the wholesale end of bank has been largely integrated. ” [ 96 ] specifically, the euro has importantly decreased the cost of deal in bonds, equity, and banking assets within the eurozone. [ 97 ] On a ball-shaped degree, there is attest that the initiation of the euro has led to an integration in terms of investment in chemical bond portfolios, with eurozone countries lend and borrowing more between each other than with other countries. [ 98 ] Financial consolidation made it cheaper for european companies to borrow. [ 80 ] Banks, firms and households could besides invest more well outside of their own country, thus creating greater international risk-sharing. [ 80 ]

effect on interest rates [edit ]

secondary market yields of government bonds with maturities of close to 10 years As of January 2014, and since the introduction of the euro, interest rates of most member countries ( particularly those with a weak currency ) have decreased. Some of these countries had the most good sovereign finance problems. The effect of declining interest rates, combined with overindulgence liquid continually provided by the ECB, made it easier for banks within the countries in which interest rates fell the most, and their linked sovereigns, to borrow meaning amounts ( above the 3 % of GDP budget deficit imposed on the eurozone initially ) and significantly inflate their public and secret debt levels. [ 99 ] Following the fiscal crisis of 2007–2008, governments in these countries found it necessary to bail out or nationalise their privately held banks to prevent systemic failure of the deposit system when underlying hard or fiscal asset values were found to be grossly hyperbolic and sometimes indeed near despicable there was no liquid marketplace for them. [ 100 ] This farther increased the already high levels of public debt to a level the markets began to consider unsustainable, via increasing politics shackle sake rates, producing the ongoing european sovereign-debt crisis .

price convergence [edit ]

The attest on the convergence of prices in the eurozone with the introduction of the euro is blend. respective studies failed to find any attest of convergence following the introduction of the euro after a phase of overlap in the early 1990s. [ 101 ] [ 102 ] other studies have found evidence of price overlap, [ 103 ] [ 104 ] in detail for cars. [ 105 ] A possible reason for the deviation between the different studies is that the processes of convergence may not have been linear, slowing down well between 2000 and 2003, and resurfacing after 2003 as suggested by a holocene discipline ( 2009 ). [ 106 ]

tourism [edit ]

A sketch suggests that the introduction of the euro has had a positive impression on the sum of tourist locomotion within the EMU, with an increase of 6.5 %. [ 107 ]

Exchange rates [edit ]

compromising substitute rates [edit ]

The ECB targets interest rates preferably than exchange rates and in general, does not intervene on the foreign exchange rate markets. This is because of the implications of the Mundell–Fleming model, which implies a central bank can not ( without capital controls ) maintain interest rate and switch over rate targets simultaneously, because increasing the money issue results in a depreciation of the currency. In the years following the Single European Act, the EU has liberalised its das kapital markets and, as the ECB has ostentation targeting as its monetary policy, the exchange-rate regimen of the euro is floating .

Against other major currencies [edit ]

The euro is the second-most widely held reserve currentness after the U.S. dollar. After its introduction on 4 January 1999 its exchange rate against the other major currencies fell reaching its lowest exchange rates in 2000 ( 3 May five Pound sterling, 25 October vs the U.S. dollar, 26 October v japanese hankering ). Afterwards it regained and its central rate reached its historical highest charge in 2008 ( 15 July volt U.S. dollar, 23 July volt japanese yen, 29 December five Pound greatest ). With the advent of the ball-shaped fiscal crisis the euro initially fell, to regain late. Despite pressure due to the european sovereign-debt crisis the euro remained stable. [ 108 ] In November 2011 the euro ‘s exchange rate index – measured against currencies of the bloc ‘s major trading partners – was trading about two percentage higher on the year, approximately at the same level as it was before the crisis kicked off in 2007. [ 109 ]
Euro commute rate against U.S. dollar ( USD ), Pound sterling ( GBP ) and japanese yen ( JPY ), starting from 1999 .

Current and historical exchange rates against 32 other currencies (European Central Bank): link

political considerations [edit ]

Besides the economic motivations to the introduction of the euro, its initiation was besides partially justified as a way to foster a closer smell of joint identity between european citizens. Statements about this goal were for example made by Wim Duisenberg, european Central Bank Governor, in 1998, [ 110 ] Laurent Fabius, French Finance Minister, in 2000, [ 111 ] and Romano Prodi, President of the european Commission, in 2002. [ 112 ] however, 15 years after the presentation of the euro, a study found no tell that it has had a positive determine on a shared sense of european identity ( and no evidence that it had a negative effect either ). [ 113 ]

linguistic issues [edit ]

The formal titles of the currency are euro for the major whole and cent for the minor ( one-hundredth ) unit and for official practice in most eurozone languages ; according to the ECB, all languages should use the same spelling for the nominated singular. [ 114 ] This may contradict normal rules for discussion formation in some languages, for example, those in which there is no eu diphthong. Bulgaria has negotiated an exception ; euro in the bulgarian Cyrillic alphabet is spelled as eвро ( evro ) and not eуро ( euro ) in all official documents. [ 115 ] In the greek script the term ευρώ ( evró ) is used ; the greek “ penny ” coins are denominated in λεπτό/ά ( leptó/á ). official commit for English-language EU legislation is to use the words euro and cent as both singular and plural, [ 116 ] although the european Commission ‘s Directorate-General for Translation states that the plural forms euros and cents should be used in English. [ 117 ] The word ‘euro ‘ is pronounced differently according to pronunciation rules in the individual languages applied ; in Danish [ ‘öwro ], in german [ ˈɔɪ̯ro ], in English [ ‘juərəu ], in french [ ø’ro ], etc. [ 118 ]