From January 1st, 2002, twelve of the fifteen European Union members will complete their conversion to using the Euro instead of their own national currencies. These twelve states comprise the Eurozone, sometimes called Euroland.
The 12 countries in the euro zone changed over to the single currency on 1 January 1999. This means that the euro became their only legal currency and their old national currencies became sub-units of the euro. The last phase of the changeover will be 1 January 2002 when euro notes and coins go into circulation and the authorities start to withdraw the old national currency in each member of the euro zone. When this is largely completed, notes and coins in national currency units will no longer be legal tender. In most countries, this should be around 28 February.
National currencies in participating countries have been sub-units of the euro since 1 January 1999, apart from Greece which only qualified in January 2001. Conversion into euros is regulated by a law passed at European Union level in 1997. This says that only the rate fixed for each national currency unit on 1 January 1999 can be used to convert into euros. Use of any other rate would be a breach of the law. Each conversion rate must be used to six significant figures to achieve the fairest outcome on rounding for both sides of any transaction e.g 1 euro = 40.3399 BEF. The same 1997 law also lays down on the rounding of odd amounts after conversion. If the number at the third decimal place is less than 5, then the euro figure must be rounded down e.g. 34.874 euros becomes 34.87. If the third decimal number is five or above, then it can be rounded up e.g. 34.875 becomes 34.88 euros.
Dual Display of Prices
During the run-up to the launch of euro notes and coins, many prices are being displayed in both national currency units and euros in shops, on bank statements and, by many companies, on wages and salaries slips. In all Member States except Austria, this is a voluntary process without any legal obligation.
During a short period immediately after the introduction of euro notes and coins on 1 January 2002, both euros and national currency notes and coins will be in circulation within each Member State in the euro zone. All of the 12 are aiming to have withdrawn virtually all national notes and coins by the end of February.
This is 1 January 2002 when euros bank notes and coins will go into circulation in the euro zone comprising Austria, Belgium, Finland, France, Germany, Greece, Netherlands, Ireland, Italy, Luxembourg Portugal and Spain.
EMU - Economic & Monetary Union
Formally adopted by the Treaty on European Union of 1992, EMU designates the zone of countries within the EU which share the same monetary policy and currency - the euro. EMU began on 1 January 1999 when the euro became a legal currency and the national currencies of 12 participating countries became subdivisions of it. Treaty on European Union.
ECB - European Central Bank
Formally constituted on 1 June 1998, the ECB is part of the European System of Central Banks together with the EU's 15 national central banks. The ECB's statute sets its primary objective as maintaining price stability. Its basic tasks include defining and implementing monetary policy for the euro area, conducting foreign exchange operations and holding and managing the official foreign reserves of the Member States.
ESCB - European System of Central Banks
The ESCB is composed of the European Central Bank (ECB) and the national central banks (NCBs) of the European Union. The NCBs of Member States that have not adopted the euro are allowed to conduct national monetary policies but not to take part in deciding and implementing monetary policy for the euro area.
Label of Consumer Confidence
This is in use in many Member States in the euro area. The European version is a line drawing of a smiling face and the words "Payments in euros accepted." The label indicates that some or all prices are being displayed in euros as well as national currency units, and that the legal exchange rate and rounding rules are being used. Use of the label is a product of an agreement, sponsored by the European Commission, between European-level representatives of consumers and those of the trade, tourism and craft trade sectors.
Monetary Law - Lex Monetae
Lex monetae is a universally accepted principle of law whose basic assumption is that each state exercises sovereign power over its own currency and would not try to legislate over another country's money. It follows from this that the European Union's laws establishing the legal status of the euro are universally recognised and that its provisions governing the conversion from national currency units to the euro and the continuity of contracts are respected in the main financial centres of the world.
No Compulsion or Prohibition
This is the principle defining the use of the euro during the transition period from 1 January 1999 to 1 January 2002. It means quite simply that transactions may be made in euros if both sides agree, but that nobody will be legally compelled to use the euro before the end of the transition period. One exception to the principle is that payment in euros can be made through a bank account and the creditor's bank is obliged to convert the payment into the currency in which the creditor's account is held.
These were the four Member States that did not participate in adopting the euro and a single monetary policy on 1 January 1999: Denmark, the UK, Sweden and Greece. Greece adopted the euro on 1 January 2001. Denmark held a referendum on the issue in September 2000, voting against joining, and Sweden is also expected to put the issue to a referendum in 2002. The UK has an "opt out" and will have a referendum on the euro before adopting it.
The euro has been a legal scriptural (written) currency in the 12 Member States of the euro area since its launch on 1 January 1999. This means it can be used for all non-cash transactions via such instruments as cheques, bank transfers, credit cards and electronic purses, providing both sides to the transaction agree.
SME's - Small and Medium Size Enterprises
Companies and businesses of all sizes need to be able to operate in euros from 1 January 2002 when the introduction of euro notes and coins completes the transition to the single currency. Before December 31 2001, SMEs need to make sure that their Information Technology systems can handle the euro, and that their accounting systems, marketing, pricing and payroll activities have all been adapted for the new currency. This means starting preparations no later than the beginning of 2001. Very small businesses may need less preparation, but all exchanges with public authorities involving money must be in euros from 1 January 2002. This means VAT, social security and accounting declarations must be made in the new currency from that date.
This runs from 1 January 1999, when the euro became the EU's single currency, until midnight on 31 December 2001, when euro notes and coins are released and national currency starts to be withdrawn from circulation. The transition period was needed to allow time to print the 13 billion bank notes and 52 billion euro coins that will go into circulation.
The official abbreviation for the euro is 'EUR'. It has been registered with the International Standards Organisation (ISO), and will be used for all business, financial and commercial purposes, just as the terms 'FRF' (French franc), 'DEM' (Deutschmark), 'GBP' (pound sterling) and 'BEF' (Belgian franc) are used today.
Euro Exchange Rates
The following table gives exchange rates between Eurozone currencies and the Euro.
Euro Bank Notes
There are 7 euro notes. In different colours and sizes they are denominated in 500, 200, 100, 50, 20, 10 and 5 euros. The designs are symbolic for Europe's architectural heritage. They do not represent any existing monuments. Windows and gateways dominate the front side of each banknote as symbols of the spirit of openness and cooperation in the EU. The reverse side of each banknote features a bridge from a particular age, a metaphor for communication among the people of Europe and between Europe and the rest of the world. Final designs were announced in December 1996 at the Dublin, European Council. All notes will carry advanced security features.
There are 8 euro coins denominated in 2 and 1 euros, then 50, 20, 10, 5, 2 and 1 cents. Every euro coin will carry a common European face. On the obverse, each Member State will decorate the coins with their own motifs. No matter which motif is on the coins they can be used anywhere inside the 12 Member States. For example, a French citizen will be able to buy a hot dog in Berlin using a euro coin carrying the imprint of the King of Spain.The common European face of the coins represents a map of the European Union against a background of transverse lines to which are attached the stars of the European flag. The 1,2 and 5 cent coins put emphasis on Europe's place in the world while the 10, 20 and 50 present the Union as a gathering of nations. The 1 and 2 euro coins depict Europe without frontiers. Final designs were agreed at the European Council meeting in Amsterdam in June 1997.
The graphic symbol for the euro, €, looks like an E with two clearly marked, horizontal parallel lines across it. It was inspired by the Greek letter epsilon, in reference to the cradle of European civilisation and to the first letter of the word 'Europe'. The parallel lines represent the stability of the euro. The official abbreviation for the euro is 'EUR'. It has been registered with the International Standards Organisation (ISO), and will be used for all business, financial and commercial purposes, just as the terms 'FRF' (French franc), 'DEM' (Deutschmark), 'GBP' (pound sterling) and 'BEF' (Belgian franc) are used today.
To show the Euro symbol in HTML documents, use the code "&"#8364;"
Euro Coin Designs
The common face of the euro coins was chosen after a design competition limited to three themes : architectural, abstract and European personalities. National selections were made by all Member States, except Denmark, and a European jury of independent experts chose the nine best series out of a total of 36 in March 1997. A final decision on the design was taken by the European Council meeting in Amsterdam in June 1997.
Consumer Testing of Coin Designs
Extensively. The winning design was the clear favourite of an opinion poll organised by the European Commission among both the general public and a wide range of currency users' organisations, including consumers and representatives of the blind and the visually impaired, and also with the European Parliament.
Euro Coin Designer
The common European face was designed by Luc Luycx, a 39-year-old computer scientist at the Belgian Royal Mint. He won ECU 24, 000 for his prize-winning series of design.
There are a number of other countries which are thinking about the advantages of joining the E.U., and probably the Eurozone. These include Czech Republic, Slovakia, Bulgaria, Hungary, Poland, Malta and Cyprus.