The history of the euro

Updated: 01.07.2011

On 1 January 2002, twelve Member States of the European Union introduced the euro as their legal tender. Bank transfers in euro became possible already in 1999, but the seven euro banknotes and eight coins were released into circulation three years later.

The economy and people of Europe have witnessed hard times over the past century – for example, the hyperinflation in Germany at the beginning of 1920s, when money lost value in minutes and people went to the baker's with a wheelbarrow loaded with money.

One of the principles of the united Europe is stability, and one way to ensure it is reliable and strong currency. In 1992, EU Member States concluded the Maastricht Treaty, which established the European Economic and Monetary Union (EMU). The EMU has two main objectives: to ensure stable economic growth and to keep price increases in check. Single currency and interest rates ensure that growth in the cost of living is under control in all Member States. This means prices fluctuate within a reasonable range and the fluctuation is predictable.

Since the adoption of the single currency in 1999, European economy has shown more stability than during the previous three decades. The annual price growth has remained around 2 per cent. Stable, low and predictable inflation provides the most favourable conditions for long-term economic growth. This enables businesses and people to make longer-term financial plans - where and how to invest their money and when and what to buy. Economic growth raises the standard of living, creates confidence in the stability of jobs, and increases national wealth.

See also the map of euro area,