Last modified on 16 November 2014, at 22:57

Currencies of the European Union

Map of currencies used within the EU and dates of Euro adoption
  States which used the euro from 1999 (currency entered circulation 2002)
  States which subsequently adopted the euro
  States using other currencies

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.

EuroEdit

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.

Current currenciesEdit

Currency Region ¤ ISO Euro peg Year Notes
Euro EUR See below 1999/2002 Also used by the institutions
Bulgarian lev  Bulgaria лв BGN Currency board 2007 No target date for euro adoption
British pound sterling
Gibraltar pound
 United Kingdom
 Gibraltar
£ GBP
GIP
Floating
Currency board
1973 Opt-out
Croatian kuna  Croatia kn HRK Floating 2013 No target date for euro adoption
Czech koruna  Czech Republic CZK Floating 2004 No target date for euro adoption
Danish krone  Denmark kr DKK ERM 1973 Opt-out
Hungarian forint  Hungary Ft HUF Floating 2004 No target date for euro adoption
Lithuanian litas  Lithuania Lt LTL ERM 2004 Official euro adoption date: 1 January 2015[1][2]
Polish złoty  Poland PLN Floating 2004 No target date for euro adoption
Romanian leu  Romania Leu RON Floating 2007 Official target date: 1 January 2019[3][4]
Swedish krona  Sweden kr SEK Floating 1995 Pending referendum approval[Note 1]
Swiss franc Flag of Campione d'Italia.svg Campione d'Italia (Italy)[5] Fr. CHF Floating[6] 1957 Also unofficially used in Büsingen am Hochrhein, Germany.[7] 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:[8] Exchange rate regime of EU countries according to Reinhart and Rogoff.png 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.

Northern CyprusEdit

EU law and treaties application to Northern Cyprus is currently suspended.[9] 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.

EU law would start to apply in Northern Cyprus if it comes under control of the Republic of Cyprus (if the Cyprus dispute is resolved through unification), whose official legal tender is the Euro.

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.[10] Nevertheless usage of the Euro in Northern Cyprus is already high in practice.[11][12][13]

Opt-outsEdit

Further information: Opt-outs in the European Union

The United Kingdom was given an opt-out from the euro in the Maastricht Treaty when it became the only state not to reach a compromise regarding currency issues. Denmark gained its opt-out after the Danish electorate rejected the treaty in a 1992 referendum and Denmark was given four opt-outs in order to pass the treaty.

Sweden then held a referendum in 2003 even though it was obliged to adopt the currency and it was rejected by the Swedish electorate. 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. Hence, the British, Danish and Swedish currencies are not obliged to be retired, however Denmark is considering dropping its opt-out (see future below).

InstitutionsEdit

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.[14]

Historic currenciesEdit

Further information: History of the euro
Currency State Symbol ISO Completely Yielded
on
Rate to
euro
Notes
Austrian schilling  Austria S or öS (ATS) 1999/2002 13.7603
Belgian franc  Belgium fr. (BEF) 1999/2002 40.3399 Interchangeable with Luxembourgian franc (BLEU)
Cypriot pound  Cyprus £ (CYP) 2008 0.585274
Dutch guilder  Netherlands ƒ or fl. (NLG) 1999/2002 2.20371
Estonian kroon  Estonia Kr (EEK) 2011 15.6466
Finnish markka  Finland mk (FIM) 1999/2002 5.94573
French franc  France ₣, F or FF (FRF) 1999/2002 6.55957 Linked to Monegasque franc,[15] both valid in France, Andorra and Monaco.
German mark  Germany DM (DEM) 1999/2002 1.95583
Greek drachma  Greece Δρχ., Δρ. or ₯ (GRD) 2001/2002 340.75
Irish pound  Ireland £ (IEP) 1999/2002 0.787564
Italian lira  Italy ₤, L. or LIT (ITL) 1999/2002 1,936.27 Linked to Sammarinese & Vatican lira,[16] all valid in Italy, San Marino and the Vatican City.
Latvian lats  Latvia Ls (LVL) 2014 0.702804
Luxembourgian franc  Luxembourg fr. or F (LUF) 1999/2002 40.3399 Interchangeable with Belgian franc (BLEU).
Maltese lira  Malta ₤ or Lm (MTL) 2008 0.4293
Portuguese escudo  Portugal \mathrm{S}\!\!\!\Vert or $ (PTE) 1999/2002 200.482
Slovak koruna  Slovakia Sk (SKK) 2009 30.126
Slovenian tolar  Slovenia SIT (SIT) 2007 239.64
Spanish peseta  Spain (ESP) 1999/2002 166.386
European Currency Unit Accounting only ₠, ECU or XEU (XEU) 1999/2002 1 Accounting currency alongside national currencies until the euro introduction.

FutureEdit

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.[17] Denmark, which has an opt out, is expected 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.

See alsoEdit

NotesEdit

  1. ^ 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.

ReferencesEdit

  1. ^ "Lithuania to adopt euro on 1 January 2015" (Press release). Council of the European Union. 2014-07-23. Retrieved 2014-10-20. 
  2. ^ Who can join and when? - European Commission
  3. ^ "Government of Romania - Convergence programme - 2014-2017". Government of Romania. April 2014. Retrieved 2014-06-04. 
  4. ^ "Romania Sets 2019 as Target Date to Join Euro Area, Voinea Says". Bloomberg. 2014-05-06. Retrieved 2014-05-14. 
  5. ^ Swiss franc is the official currency and euro is widely accepted.
  6. ^ But capped as of September 2011
  7. ^ Euro is the officially currency, but the Swiss franc is commonly used
  8. ^ Carmen Reinhart's homepage"Exchange Rate Regime Reinhart and Rogoff Classification - Annual fine classification, 1946-2010." 5th November 2014.
  9. ^ Protocol 10 to the Treaty of Accession 2003 (OJ L 236, 23.9.2003, p. 955).
  10. ^ De Facto Classification of Exchange Rate Regimes and Monetary Policy Frameworks, IMF 2008
  11. ^ Hadjicostis, Menelaos (30 December 2007) In north Cyprus, the Turkish lira is the official currency, but euro is embraced, International Herald Tribune
  12. ^ Cyprus and Malta adopt the euro BBC
  13. ^ Cyprus' isolated north will be enthusiastic – if unofficial – euro users
  14. ^ cite web|http://www.investopedia.com/terms/c/currency_board.asp
  15. ^ Replaced alongside French franc with euro
  16. ^ Replaced alongside Italian lira with euro
  17. ^ The euro - European Commission