Euro

The euro is the single currency shared today by 20 Member States of the European Union, which together make up the euro area. It was established by the Treaty on European Union, which sets out that one aim of the EU is to establish an economic and monetary union with the euro as its currency.

The euro was introduced in phases.

In 1999, 11 Member States fixed their exchange rates, adopted a shared monetary policy under the European Central Bank and launched the euro as their new common currency. The euro was initially an electronic currency used by financial markets and for cashless payments.

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

According to the EU treaties, all Member States (with the exception of Denmark, which has an opt-out) are required to adopt the euro once they fulfil the convergence criteria (simply put, when their rate of inflation, their public finances, their exchange rate and their long-term interest rates broadly converge with those of the three best-performing euro-area countries). These criteria seek to ensure that the Member State joining the euro area can integrate smoothly into the monetary union without a risk of disruption to either itself or the euro area as a whole.