The Euro is an official currency of the European Union, which comprises 17 of the 27-member regions. The Euro was introduced in the financial markets globally in the year 1999, after it was officially adopted in the year 1995 in Madrid. The Euro stands amongst the circulation of highest combined notes and coins globally, even surpassing the US Dollar.
The European Central bank based in Frankfurt, the union of the central banks of the eurozone countries manage and administer the Euro currency. However, the European Central Bank possesses the sole authority to set all the monetary policies for the Euro.
Some Facts That You Ought To Know About The Euro:
- The short name for Euro is EUR.
- The nicknames for Euro are Ege, Juro, Ouro, Teuro, Quid.
- The most frequently used coins are 1 €, 2 €, 10C, 20C, 50C.
- The most frequently used banknotes are 5 €, 10 €, 20 €, 50 €, 100 €.
- The most rarely used banknotes are 200 €, 500 €.
- European Central Bank is the chief bank of this region.
Euro - History of Euro
Euro is the monetary unit and the currency of the European Union. The introduction of the Euro goes back to the year 1999 when it appeared for the first time as a non-cash monetary. It was only after the year 2002 that Euro was available both in notes and coins to the member countries of the European Union. Since 28th January 2002, Euro has been the sole and official currency of the 12 European Union Countries. The shift from national currencies to Euro is considered the worlds largest monetary changeover to take place. The shift was accompanied by individuals from every sphere and governmental organisation.
The Economic and Monetary Union was the first to showcase an ambition for a common currency unit. The formal circulation began in the year 2002 but the preparations for its introduction date back to the 1990s. The Maastricht Treaty was signed in 1991 that paved the way for Euro currencies. The treaty focused on introducing a common currency unit for the European Union. The treaty received criticism on the ground that a common currency unit would pose a threat to nationalism and sovereignty. Britain and Sweden, initially, refrained from signing the treaty. The first country to adopt the Euro was Slovenia in the year 2007 and gradually other countries followed.
The criteria for using Euro were first to become a member of the European zone followed by five essential ratifications of the Maastricht Treaty which concluded that a country's inflation rate could not be more than 1.5 per cent than that of the EU countries having the lowest. It was required to fix the exchange rate for the next two years. The European Central Bank, Frankfurt has the responsibility for issuing Euros and dealing with the measures for protecting its market value. Euro has emerged as a leading currency globally with its value reaching high. 1€ equals $1.09 according to the latest update.
The Euro symbol represents the unity of Europe with a map of Europe, the EU's flag, and arches, gateways, windows, and bridges. It was designed by the Austrian artist Robert Kalina. Presently, Euros are available in denominations from €5 to €500. Euro is used in several independent countries including French Guiana, Guadeloupe, and Martinique. This has also resulted in the diversity of designs as these independent countries can decide on the design while minting.
Factors affecting the exchange rate of the Euro
The Central Bank of the Eurozone regulates the flow of Euros in all the EU nations. Several economic, and political factors are responsible for affecting the value of the Euro. Let's discuss the prime ones:
1. The Central Bank of the Eurozone
The Eurozone has seven institutions and one of these is The Central Bank. It was established by the Treaty of Amsterdam, in 1998. The bank manages and administers the flow of the Euro across the Eurozone. Any changes in the policies of the bank or the introduction of new policies affect the Euro exchange rate. To maintain a healthy status, The Central Bank works in accordance with the Central Banks of each EU (European Union) nation.
2. Eurozone countries
A strong sense of togetherness and unity is shown by the Eurozone as 19 out of 28 European countries are a part of the Eurozone. All these 19 countries have Euro as their national currency. Any changes in the list of the Eurozone countries can impact the overall value of the Euro in the international scenario. Also, since The Central Bank works in accordance with the Central Banks of each EU, financial debts and budget deficits of different EU countries impact the Euro.
3. Employment status
The employment of any country plays a vital role in deciding its financial scenario. So, Eurozone countries need to maintain a good employment status and work towards unemployment so that the exchange rate of the Euro remains stable.
4. International policies
International politics and policies also decide the currency value of different countries, to this, the European Nation is no exception. An increase in the prices of international commodity markets and changes in international politics affects the Euro and eventually, the economic and financial conditions of each EU nation as well.
5. Economic and political conditions
All 19 countries of the Eurozone contribute to the stability of the Euro. So, the economic status and political scenarios of EU nations play a quintessential role in deciding the exchange rate of the Euro. While economic growth can hike the value of the currency, a decline can lead to the devaluing of the same.
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