INDEPTH: THE EURO
History of the euro
Amy Olmstead & Gary Graves | Dec. 2001 Updated Sept.2003
The euro has a long history, going all the way back to early efforts at European economic co-operation after World War II.
Leading nations in Europe wanted to increase their economic ties to promote growth and peace. In 1951, Belgium, France, West Germany, Italy, Luxembourg and The Netherlands signed the Paris Treaty, creating the European Coal and Steel Community. In 1957, the same six countries built on that co-operation. They signed the Treaties of Rome, creating the European Economic Community.
It was two decades before the movement toward a common currency accelerated. In 1979, the European Monetary System took effect. It created a currency unit called the ecu to stabilize exchange rates and keep inflation in check. Coincidentally, this was the name of an archaic French coin.
The Single European Act increased political co-operation between the six EEC countries in 1986. It also extended jurisdiction to monetary co-operation. In 1992, the ambitious Maastricht Treaty was signed, setting a deadline of January 1999 for a shared currency. The treaty created the European Union and laid the groundwork for a single monetary and exchange rate policy and shared economic policies.
Through the 1990s, the necessary financial institutions were put in place. The European Monetary Institute met for the first time in 1994. It was the precursor to the European Central Bank, which was created in 1998.
In December 1995, the European Union backed the euro name for single currency and reaffirmed the 1999 deadline. Members stepped up campaigns to promote the euro to their citizens. Britain, Denmark and Sweden decided to keep their national currencies.
The euro took its first step into circulation in January 1999, right on schedule. The 11 member countries officially pegged their exchange rates to the euro and it began to be used in non-cash transactions and accounting. Companies started using the euro for internal reporting, invoicing and issuing bonds. Stocks began trading in euros. Banks started offering euro credit-card accounts and provided euro balances for bank accounts. People were able to pay mortgages and use travellers cheques in euros.
The transition to the euro continued for the next three years. Greece joined the Euro Zone in 2001, after finally meeting economic criteria. In August 2001 the European Central Bank revealed what the euro bills would look like. The next month, the first euro bills and coins were given to banks and some retailers to allow them to prepare. In December, some coins were distributed to people in so-called starter kits.
The currency went into common circulation on January 1, 2002. Old currencies were phased out by spring the same year. It is still be possible to exchange pounds, lira, marks, and francs into euros, but you'll have to go to a bank.
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| TIMELINE: |
April 1951: Paris Treaty signed
March 1957: Treaties of Rome signed
March 1979: European Monetary System created
Feb. 1986: Single European Act signed
Feb. 1992: The Maastricht Treaty signed
Jan. 1994: European Monetary Institute created
Dec. 1995: EU backs euro as name for single currency
June 1998 : European Central Bank established
Jan. 1999: Euro is launched
Jan. 2001: Greece adopts euro
Aug. 2001: European Central Bank releases final details of euro banknote
Sept. 2001: Euros made available to banks and some retailers
Dec. 2001: Euro 'starter packs' with coins distributed
Jan. 2002: Euro bills enter common circulation
March 2002: Old currencies no longer accepted as legal tender
Sept. 2003: Sweden rejects euro
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