There are twelve currencies of the European Union as of 2014, the principal currency being the Euro. The Euro is used by the institutions of the European Union and by the Eurozone states, which account for 18 of the 28 member states of the European Union. All but two states are obliged to adopt the currency; Denmark and the United Kingdom, through a legal opt-out from the EU treaties, have retained the right to operate independent currencies within the European Union. The remaining eight states must join the ERM II and attain the third stage and adopt the Euro eventually.
The euro is the result of the European Union's project for economic and monetary union which came fully into being on 1 January 2002. and it is now the currency used by the majority of European Union's member states, with all but three bound to adopt it. It is the currency used by the institutions of the European Union and in the failed European Constitution it was to be included with the symbols of Europe as the formal currency of the European Union. The euro is also widely used by other states outside the EU.
||This article possibly contains original research. (January 2012)|
||See below||1999/2002||Also used by the institutions|
||Currency board||2007||No target date for euro adoption|
|British pound sterling
| United Kingdom
||Floating||2013||No target date for euro adoption|
|Czech koruna||Czech Republic||Kč||
||Floating||2004||No target date for euro adoption[Note 1]|
||Floating||2004||No target date for euro adoption|
||ERM||2004||Official euro adoption date: 1 January 2015|
||Floating||2004||No target date for euro adoption|
||Floating||2007||Official target date: 1 January 2019|
||Floating||1995||Pending referendum approval[Note 2]|
|Swiss franc||Campione d'Italia (Italy)||Fr.||
||Floating||1957||Also unofficially used in Büsingen am Hochrhein, Germany. Swiss Franc is issued by Switzerland.|
- Note that there are other currencies used in overseas territories of member states. Those territories however are not part of the European Union proper (legally subject to all its law) so are not listed here.
Exchange rate regimes of EU countries according to Reinhart and RogoffEdit
Reinhart and Rogoff classifies the exchange rate regimes of EU countries as following: The classification codes are:
- n/a : Data missing
- 1 : No separate legal tender
- 2 : Pre announced peg or currency board arrangement
- 3 : Pre announced horizontal band that is narrower than or equal to +/-2%
- 4 : De facto peg
- 5 : Pre announced crawling peg
- 6 : Pre announced crawling band that is narrower than or equal to +/-2%
- 7 : De factor crawling peg
- 8 : De facto crawling band that is narrower than or equal to +/-2%
- 9 : Pre announced crawling band that is wider than or equal to +/-2%
- 10 : De facto crawling band that is narrower than or equal to +/-5%
- 11 : Moving band that is narrower than or equal to +/-2% (i.e., allows for both appreciation and depreciation over time)
- 12 : Managed floating
- 13 : Freely floating
- 14 : Freely falling
- 15 : Dual market in which parallel market data is missing.
EU law and treaties application to Northern Cyprus is currently suspended. Its territory is claimed by the Republic of Cyprus, one of the EU member states, but currently Northern Cyprus is under Turkish Republic of Northern Cyprus (TRNC) control. TRNC isn't recognised by the Republic of Cyprus (which claims jurisdiction over the whole island) and the European Union.
Presently, the TRNC government has declared the Turkish lira (TL,
TRY) to be its legal tender. TL is not issued by any EU member state, but by Turkey and it has a free floating regime. Nevertheless usage of the Euro in Northern Cyprus is already high in practice.
During the negotiations of the Maastricht Treaty of 1992 the United Kingdom secured an opt-out, while a protocol gave Denmark the right to decide if and when they would join the euro. Denmark subsequently notified the Council of the European Communities of their decision to opt-out of the euro, and this was included as part of the 1992 Edinburgh Agreement, a Decision of Council, reached following the Maastricht Treaty's initial rejection in a 1992 Danish referendum. The purpose of the agreement was to assist in its approval in a second referendum, which it did.
Sweden, which is obliged to adopt the treaty under the terms of its accession treaty, held a referendum in 2003 on adopting the euro which was rejected by the Swedish electorate. The government has chosen to deliberately fail to meet the convergence criteria for euro adoption by not joining ERM II without prior approval by a referendum. The European Commission stated it would respect this decision for now but not tolerate similar moves from countries that join the EU after the euro is introduced.
Those European Union states that have adopted it are known as the eurozone and share the European Central Bank (ECB). The ECB and the national central banks of all EU countries, including those who operate an independent currency, are part of the European System of Central Banks. Before a state adopts the euro, its currency has to spend at least two years in the European Exchange Rate Mechanism which pegs it to the euro within a fixed band. Currently two currencies are in ERM, including the Danish Krone which has an opt-out. The Bulgaria lev is also pegged via a currency board.
|Austrian schilling||Austria||S or öS||
||1999/2002||40.3399||Interchangeable with Luxembourgian franc (BLEU)|
|Dutch guilder||Netherlands||ƒ or fl.||
|French franc||France||₣, F or FF||
||1999/2002||6.55957||Linked to Monegasque franc, both valid in France, Andorra and Monaco.|
|Greek drachma||Greece||Δρχ., Δρ. or ₯||
|Italian lira||Italy||₤, L. or LIT||
||1999/2002||1,936.27||Linked to Sammarinese & Vatican lira, all valid in Italy, San Marino and the Vatican City.|
|Luxembourgian franc||Luxembourg||fr. or F||
||1999/2002||40.3399||Interchangeable with Belgian franc (BLEU).|
|Maltese lira||Malta||₤ or Lm||
|Portuguese escudo||Portugal||or $||
|European Currency Unit||Accounting only||₠, ECU or XEU||
||1999/2002||1||Accounting currency alongside national currencies until the euro introduction.|
Except for the two states with opt outs, all current and future members of the EU are obliged to adopt the Euro as their currency, thus replacing their current ones. Denmark, which has an opt out, is planning to hold a referendum on its opt-outs due to increasing pressure to adopt the euro. The Danish Kroner is already pegged to the euro, and Denmark has fulfilled all the requirements for adoption.
- Initially, the Czech Republic planned to adopt the euro as its official currency in 2010, however this was postponed, and evaluations in 2006 found this date to be unlikely. Miloš Zeman, who was elected President of the Czech Republic in early 2013, supports euro adoption by the Czech Republic, though he also advocates for a referendum on the decision.
- Sweden, while obliged to adopt the euro under its Treaty of Accession, has chosen to deliberately fail to meet the convergence criteria for euro adoption by not joining ERM II without prior approval by a referendum.
- "Lithuania to adopt euro on 1 January 2015" (Press release). Council of the European Union. 2014-07-23. Retrieved 2014-10-20.
- Who can join and when? - European Commission
- "Government of Romania - Convergence programme - 2014-2017". Government of Romania. April 2014. Retrieved 2014-06-04.
- "Romania Sets 2019 as Target Date to Join Euro Area, Voinea Says". Bloomberg. 2014-05-06. Retrieved 2014-05-14.
- Swiss franc is the official currency and euro is widely accepted.
- But capped as of September 2011
- Euro is the officially currency, but the Swiss franc is commonly used
- Carmen Reinhart's homepage"Exchange Rate Regime Reinhart and Rogoff Classification - Annual fine classification, 1946-2010." 5th November 2014.
- Protocol 10 to the Treaty of Accession 2003 (OJ L 236, 23.9.2003, p. 955).
- De Facto Classification of Exchange Rate Regimes and Monetary Policy Frameworks, IMF 2008
- Hadjicostis, Menelaos (30 December 2007) In north Cyprus, the Turkish lira is the official currency, but euro is embraced, International Herald Tribune
- Cyprus and Malta adopt the euro BBC
- Cyprus' isolated north will be enthusiastic – if unofficial – euro users
- Parliament of the United Kingdom (12 March 1998). "Volume: 587, Part: 120 (12 Mar 1998: Column 391, Baroness Williams of Crosby)". House of Lords Hansard. Retrieved 13 October 2007.
- cite web|http://www.investopedia.com/terms/c/currency_board.asp
- Replaced alongside French franc with euro
- Replaced alongside Italian lira with euro
- The euro - European Commission