Euro

:For other uses, see {{PAGENAME}} (disambiguation) or EUR (disambiguation).

Transition

The euro was established by the provisions in the 1992 Maastricht Treaty on European Union that was used to establish an economic and monetary union. In order to participate in the new currency, member states had to meet strict criteria such as a budget deficit of less than three per cent of GDP, a debt ratio of less than sixty per cent of GDP, combined with low inflation and interest rates close to the EU average.

Related Topics:
1992 - Maastricht - Treaty on European Union - Economic and monetary union - Budget deficit - GDP - Inflation - Interest

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Due to differences in national conventions for rounding and significant digits, all conversion between the national currencies had to be carried out using the process of triangulation via the euro. The definitive values in euro of these subdivisions (which represent the exchange rates at which the currency entered the euro) are as follows:

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• 13.7603 Austrian schillings (ATS)
• 40.3399 Belgian francs (BEF)
• 2.20371 Dutch guilder (NLG)
• 5.94573 Finnish markka (FIM)
• 6.55957 French francs (FRF)
• 1.95583 German Mark (DEM)
• 0.787564 Irish pounds (IEP)
• 1936.27 Italian lire (ITL)
• 40.3399 Luxembourg francs (LUF)
• 200.482 Portuguese escudos (PTE)
• 166.386 Spanish pesetas (ESP)

The above rates were determined by the Council of the European Union, based on a recommendation from the European Commission based on the market rates on 31 December 1998, so that one ECU (European Currency Unit) would equal one euro. (The European Currency Unit was an accounting unit used by the EU, based on the currencies of the member states; it was not a currency in its own right.) These rates were set by Council Regulation 2866/98 (EC), of 31 December 1998. They could not be set earlier, because the ECU depended on the closing exchange rate of the non-euro currencies (principally the pound sterling) that day.

Related Topics:
31 December - 1998 - European Currency Unit - Pound sterling

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Greece failed to meet the criteria for joining initially, so it did not join the common currency on 1 January, 1999. It was admitted two years later, on 1 January 2001, at the following exchange rate:

Related Topics:
Greece - 1 January - 1999 - 2001

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• 340.750 Greek drachmas (GRD)

The procedure used to fix the irrevocable conversion rate between the drachma and the euro was different, since the euro by then was already two years old. While the conversion rates for the initial eleven currencies were determined only hours before the euro was introduced, the conversion rate for the Greek drachma was fixed several months beforehand, in Council Regulation 1478/2000 (EC), of 19 June 2000.

Related Topics:
19 June - 2000

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The currency was introduced in non-physical form (travellers' cheques, electronic transfers, banking, etc.) at midnight on 1 January, 1999, when the national currencies of participating countries (the Eurozone) ceased to exist independently in that their exchange rates were locked at fixed rates against each other, effectively making them mere non-decimal subdivisions of the euro. The euro thus became the successor to the European Currency Unit (ECU). The notes and coins for the old currencies, however, continued to be used as legal tender until new notes and coins were introduced on 1 January 2002.

Related Topics:
1 January - 1999 - European Currency Unit - Legal tender - 2002

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The changeover period during which the former currencies' notes and coins were exchanged for those of the euro lasted about two months, until 28 February 2002. The official date on which the national currencies ceased to be legal tender varied from member state to member state. The earliest date was in Germany; the mark officially ceased to be legal tender on 31 December 2001, though the exchange period lasted two months. The final date was 28 February 2002, by which all national currencies ceased to be legal tender in their respective member states. (Note that some of these dates were earlier than was originally planned.) However, even after the official date, they continued to be accepted by national central banks for several years up to forever (Austria, Germany, Ireland, Spain). The earliest coins to become non-convertible were the Portuguese escudos, which ceased to have monetary value after 31 December 2002, although banknotes do remain exchangeable until 2022.

Related Topics:
28 February - 2002 - Germany - Mark - 31 December - 2001 - 2022

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Although some countries are not printing the €500 and €200 banknotes, all banknotes are legal tender throughout the Eurozone. Finland decided not to mint or circulate one-cent and two-cent coins, except in small numbers for collectors. All cash transactions in Finland ending in one or two cents are rounded down and three or four cents are rounded up. Despite this convention, the one-cent and two-cent coins are still legal tender in Finland.

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