The euro is the single currency shared by (currently) 16 of the European Union's Member States, which together make up the eurozone or euro area.
The euro was adopted by the following countries:
- In 1999, by Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland
- In 2001 by Greece
- In 2007 by Slovenia
- In 2008 by Cyprus and Malta
- In 2009 by Slovakia
After the fall of the Bretton Woods system began the governments of Wester Europe to amass public debt to grow their welfare states. But it was soon recognized their wildly fluctuating currencies hindered international trade and could so undermine their income.
The first attempt was the European Monetary System (EMS, founded 1978). It was a cartel of paper money producers, who agreed to stabilize the exchange rates between their currencies at certain levels, or "parities". In practice, those inflating the least would determine the inflation rates of all others. If someone were to inflate more, they would have to persuade others to do the same, or risk a change of parity. The German Bundesbank was the most conservative of the central banks. The problem was settled only in the early 1990s, when the German government sought to take over former communist East Germany and needed the consent of its major western partners. The price for that consent was the abdication of the Deutsche mark. A few years after the rejoining of East and West Germany were the paper money producers united in the European Central Bank (ECB, started operation in 1999 and issued Euro notes and coins by 2002).
The euro was launched on 1 January 1999, to become the new official currency of 11 Member States, replacing the old national currencies – such as the Deutschmark and the French franc – in two stages. First introduced as a virtual currency for cash-less payments and accounting purposes, while the old currencies continued to be used for cash payments and considered as 'sub-units' of the euro, it then appeared in physical form, as banknotes and coins, on 1 January 2002. The euro is not the currency of all EU Member States. Two countries (Denmark and the United Kingdom) agreed an 'opt-out' clause in the Treaty exempting them from participation, while the remainder (many of the newest EU members plus Sweden) have yet to meet the conditions for adopting the single currency. Once they do so, they will replace their national currency with the euro.