Historical Sketch

The origin of European Union lies in the European Coal and Steel Community of 1952 which developed into the European Economic Community (EEC) in 1957. With the Maastricht Treaty of 1993, the European Community (EC) emerged which transfromed into the European Union (EU) with Lisbon Treaty of 2004.

Monetary History Overview

After the end of the Bretton-Woods system of fixed exchange rates in the early 1970s, several European countries began aligning their exchange policies. As a common reference standard, the European Unit of Account (EUA) got created in January 1976. It consisted of a basket of nine European currencies, of Germany, Great Britain, France, Italy, Netherlands, Belgium / Luxembourg, Denmark, Ireland, weighted according to their economic strengths. The EUA was renamed into European Currency Unit (ECU) in 1979, and the basket got enlarged by the Greek currency in September 1984. Another extension was made in September 1989 with the addition of the Spanish and Portuguese currencies. The 12-currencies basked was then selected as the base of the future common currency.

In late 1991, the European Union (EU) was created in the Treaty of Maastricht. One of the cornerstones was the adoption of the European Euro as a common currency. A harmonization process of the different economies was initiated in December 1995 during which criteria had to be met to qualify for admission into the monetary union. In January 1999, eleven EU member states created the European Monetary Union. The introduced the Euro by irrevocably fixing an exchange rate to their national currencies. The respective central banks were joint into the European Central Bank system. The Euro was introduced at par with the ECU, the exchange rate was set to float afterwards. In July 2000, Greece became the 12th EU member state to pass the admission criteria and joined the monetary union. In January 2002 finally, Euro banknotes and coins were issued everywhere, and the predecessor currencies got withdrawn within 1-2 months.

Member States

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain were the founding members of the European Monetary Union in 1999, Greece followed in 2000. Three EU member states, Denmark, Great Britain and Sweden, did not join the monetary union and kept their national currencies.

Any country joining the EU since 1995 automatically adopts the Euro as soon as the admission criteria are met. Hence, after 2002 the Euro has been introduced by Slovenia (2007), Cyprus (2008), Malta (2008), Slovakia (2009), Estonia (2011), Andorra (2013), Latvia (2014), Lithuania (2015).

Currency Units Timeline

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Monetary History Sources