When Was the Euro Created? - an Overview of European Currency

June 15th, 2023

This article is supposed to answer – when was the euro created? While it may seem like a simple question, a single date we give wouldn’t truly be accurate. But if dates are all you’re interested in, scroll down to the ‘The Creation of the Euro, Summarized’ subheading and you’ll find a couple of answers.

Yet, we suggest you stick around to get the full story. This article will explain the origins of the euro, including initial ideas about a single European currency, the whole process of how the euro came to be, and some insight into the future of this currency. But before we get to that, let’s give a quick overview of the currency as it is today.

A Short Overview of the Euro

The euro is the currency of the European Union, used by most of its member states. The symbol for the euro is € and the ISO code is EUR. The euro is managed by the European Central Bank and the Eurosystem (the Eurosystem is comprised of the ECB and the central banks of the states that have adopted the euro).

The Eurozone is the name for the currency union of the EU states that use the euro. The euro is also the official currency of several states that are not members of the EU, as well as some dependent territories. Conversely, there are several EU member states that do not use the euro but their national currencies.

Namely, Bulgaria, Czechia, Denmark, Hungary, Poland, Romania, and Sweden do not use it. One euro is divided into 100 cents, often called euro cents, to distinguish it from other currencies. The euro is the second most traded currency in the world, right behind the US dollar.

Quick Note: there’s often confusion about the plural form of euro – is it euro or euros? Official EU legislation in English exclusively uses the plural form euro, but euros is generally considered the standard English form for the plural of a currency. So, both are effectively correct.

Coins and Banknotes

There are 8 coins and 7 banknotes in circulation.

  • Coins:
    • 1 cent
    • 2 cent
    • 5 cent
    • 10 cent
    • 20 cent
    • 50 cent
    • 1 euro
    • 2 euro
  • Banknotes:
    • 5 euro
    • 10 euro
    • 20 euro
    • 50 euro
    • 100 euro
    • 200 euro
    • 500 euro

The Origin of the Economic and Monetary Union (EMU) of the EU

Ideas about a single European currency and a monetary union stretch back to at least the first half of the 20th century – a German statesman, Gustav Stresemann, proposed a European currency at the League of Nations in 1929. His request was not fulfilled, but his proposal was not too shocking.

This concept of a monetary union between countries was not a new idea in Europe. The Latin Monetary Union existed from 1865 to 1927, where the French Franc was used as the base currency. Similarly, the Scandinavian Monetary Union was founded in 1873 and lasted until near the end of World War I.

Over the decades, there were several attempts to create a central European bank with its own currency. The European Commission proposed an initiative in 1969 that would facilitate better monetary cooperation and economic coordination of its member states.

In 1970, the Werner Plan (made by a panel of experts chaired by Luxembourg’s Prime Minister, Pierre Werner) was presented and accepted as a guideline to create a monetary union in 3 stages.

The Werner Plan was never fully realized largely due to the collapse of the Bretton Woods system, when the US President, Richard Nixon, terminated the direct convertibility of the USD to gold, and due to rising oil prices and commodity market disruptions.

Finally, the idea of a European monetary union was reviewed in 1988, when a committee composed of central bank governors and chaired by Jack Delors, president of the European Commission, was asked to create a realistic plan for creating a European economic and monetary union.

This led to the Delors Report from 1989 which formulated the policies of the economic and monetary union (EMU) of the European Union. The EMU has three stages. The Maastricht Treaty, the treaty which officially founded the European Union, obligates all member states to follow the policies of the EMU.

One of the main goals of the EMU was the creation of a single European currency – the euro.

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The Creation of the Euro

The Maastricht Treaty was signed on February 7, 1992, by Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, the UK, and Germany – this established the European Union. Article B of the Treaty prescribes the creation of a single, at that time unnamed, currency.

One of the objectives of the Treaty, to quote the exact wording of the document, was: “to promote economic and social progress which is balanced . . . through the establishment of economic and monetary union, ultimately including a single currency in accordance with the provisions of this Treaty.

The name for this single currency ultimately became the euro, when it was officially adopted on December 16, 1995. Belgian Germain Pirolot is credit with giving the currency its name when he suggested it in a letter to the then-president of the European Commission.

The Introduction of the Euro as a Non-Physical Currency

So, in 1992 it was definitively decided that there would be a single European currency and in 1995 it was named the euro. But that still doesn’t make it a currency that could be used. On December 31, 1998, the rates for the euro were set so that 1 euro was equal to 1 European Currency Unit at the market rate that existed on December 31.

The European Currency Unit (ECU) is a complex topic in itself, so we can’t do it justice here. In short, the ECU was not a currency in its own right, but a unit of account composed of a basket of currencies of the members of the European Economic Community.

To put it even more plainly (and potentially incur the wrath of economists worldwide), you can consider the ECU as a measure of worth used by the European Economic Community at that point. In any case, the euro was set at parity with the ECU on December 31, 1998.

Finally, the euro was introduced on midnight, January 1, 1999. The national currencies of the countries adopting the euro ceased to exist independently and a single European currency was created. So, that’s it, right? When was the euro crated? – on January 1, 1999.

Well… no. In 1999, the euro was only introduced as a non-physical currency. So there were no coins or banknotes issued. With today’s promulgation of digital currencies that might not seem like a big deal, but it was then. Even today, you won’t find currencies issued by central banks that don’t have a physical form.

Plus, the coins and banknotes of the currencies that the euro replaced continued to be used as legal tended, with a fixed exchange rate against each other. So, the euro was introduced in 1999 but only as a non-physical currency and the currencies that it replaced continued to be used. This brings us to the last chapter of our story on the creation of the euro.

stack of euros

When Did the Euro Begin to Circulate?

Now, we’re truly nearing the end. The first physical euro coins and notes were introduced on January 1, 2002. The national currencies that it replaced stopped being legal tender, although the exact dates varied from state to state. So, let’s try to sum it all up.

The Creation of the Euro, Summarized

When was the euro created? Take your pick from the 4 dates:

  1. February 7, 1992 – when the Maastricht Treaty definitively prescribed the creation of a single European currency;
  2. December 16, 1995 – when the euro officially got its name;
  3. January 1, 1999 – when it was introduced as a non-physical currency;
  4. January 1, 2002 – when physical euro coins and banknotes entered into circulation.

Countries That Are Expected to Adopt the Euro in the Near Future

Per the Maastricht treaty, all EU members are obligated to join the Eurozone and adopt the euro as their official currency, barring Denmark. Denmark negotiated an exemption to this rule in 1992, which means that it will continue using the Danish krone.

The other member states that do not use the euro, Bulgaria, Czechia, Hungary, Poland, Romania, and Sweden, will have to adopt it (presuming they continue to be EU members) in the future. However, only two of these countries have set dates:

  1. The Bulgarian lev is set to be replaced on January 1, 2025.
  2. The Romanian leu is set to be replaced in 2029.

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