Monday, January 2, 2012

Euro notes and coins 10 years on

Reference: MEMO/11/945. Date: 22/12/2011. 1 January 2012 marks the 10th anniversary of the introduction of euro banknotes and coins. Although the euro was introduced on 1 January 1999, it was not until 1 January 2002 that the single currency became tangible in the form of euro banknotes and coins. Today, the euro is the common currency of 17 of the EU Member States with a total population of 332 million. Moreover, Monaco, San Marino and the Vatican State have officially adopted the euro as their national currency. Andorra has recently signed an agreement with the EU to this effect. There are 14.4 billion banknotes and 97 billion coins in circulation, with a total value of over €864 billion and almost €23 billion respectively1.


The eight denominations of the euro coins have one country-specific side and one side that is identical in all euro area countries. The latter was designed by Luc Luycx of the Royal Belgian Mint and depicts the denomination of the coin and a map of the EU. The other side is country-specific and shows a prominent symbol of particular importance to that country. In addition to the regular coins, there are also commemorative and collectors' coins. Collectors' coins are not intended for circulation. They are only legal tender in the specific country that issues them.
However, commemorative 2-euro-coins are intended for circulation and can be issued either by one country or jointly by all euro area countries. In the latter case, all countries of the euro area simultaneously issue a coin bearing the same design on the country-specific side of the coin. For example, on 1 January 2012 around 90 million special 2-euro coins will be issued to mark the euro's 10th anniversary. It was designed by the winner of an online competition that attracted close to 35.000 contributions from the euro area. This is the third time the countries of the euro area jointly issue such a commemorative coin. They also did so in 2007 on the occasion of the 50th anniversary of the signing of the Treaty of Rome and, in 2009, in order to mark the 10th anniversary of the introduction of the euro.

The seven denominations of euro banknotes share the same design in all euro area countries. The notes were conceptualized by Robert Kalina, from the Oesterreichische Nationalbank (Austrian Central Bank). The designs depict architectural styles from seven periods of Europe's cultural history: Classical, Romanesque, Gothic, Renaissance, Baroque and Rococo, the Iron Age and modern 20th century architecture. The windows and gateways on the front of the banknotes symbolise the European spirit of openness and co-operation. The bridges on the back stand for communication between the people of Europe and between Europe and the rest of the world.
Issuing euro notes and coins

The European Central Bank (ECB) has the exclusive right to authorise the issuing of euro banknotes by the national central banks of the euro area. The responsibility for producing them and putting them into circulation is shared among national central banks. Coins are issued by euro area Member States in volumes approved each year by the ECB and production is entrusted to the national mints.
In addition to the euro area Member states, Monaco, San Marino and the Vatican City are entitled to issue limited quantities of their own euro coins, following agreement with the EU. Andorra will also be allowed to do so as of 1 July 2013.
Kosovo2 and Montenegro also use the euro as a de facto domestic currency, as they have no agreements with the EU; this is keeping with an older practice of using the German mark, which was previously the de facto currency in these areas.
“Global” Euro

The euro has established itself as a major international currency, second only to the US dollar. It is globally used as a reserve currency. In recent years, the euro's share in international reserves has roughly been a quarter of total foreign currency reserves (26.6% in the first quarter of 2011). Moreover, the euro is the second most actively traded currency in foreign exchange markets; in April 2010 it had a share of 19.5% in the daily foreign exchange market turnover.

The first stage of the Economic and Monetary Union (EMU) started on 1 July 1990. It was characterised by the abolition of restrictions on the movement of capital. On 1 November 1993, the Treaty on European Union, which was signed in Maastricht, The Netherlands, entered into force. It set out the respective competences of the European Central Bank, governments and central banks in the euro area on issuing euros and ensured the principle of full freedom of movement of capital.

The second stage started on 1 January 1994 and was marked by the establishment of the European Monetary Institute (EMI), the predecessor of the ECB. The name "euro" was then chosen by the European Council in Madrid in 1995.

On 1 January 1999, the EMU entered into its third stage. From this date, the ECU ceased to be a basket of currencies. It became a currency in its own right and was renamed as the euro. The conversion rates of the currencies of the 11 Member States initially participating (Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland) were irrevocably fixed. Until 1 January 2002, the euro was not a tangible currency, but a virtual currency for cashless transactions and accounting purposes, while the old currencies continued to be used for cash payments and were considered as 'sub-units' of the euro.

Greece joined the EMU in 2001, Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009 and Estonia in 2011.

The way forward

The single currency is a logical complement to the Single Market, as it increases the efficiency of the latter. The euro offers many advantages and benefits compared to previously, when each Member State used its own currency.

Before the introduction of the euro, the need to exchange currencies resulted in extra costs for consumers and businesses and a lack of transparency in cross-border transactions. However, the euro is not just a technical monetary arrangement, but also a symbol for the determination to work together for closer European integration.

The new rules for economic and fiscal surveillance are major steps in that direction. This so-called "Six-Pack" set of rules entered into force on 13 December 2011. It represents the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the EMU. “The Six-Pack” allows for a more rigorous enforcement of the fiscal rules and lays the path for a correction of macro-economic imbalances at an early stage. Building on that, the European Commission has tabled a proposal for a tighter monitoring of national budgets on 23 November 2011 (IP/11/1381). Moreover, EU leaders took important decisions at the European Council of 9 December which will lead to a further strengthening of fiscal discipline and economic governance in the EU and the Eurozone.

Of course there is no single "silver bullet" that can get the euro area out of the current crisis, which was caused by unsustainable fiscal policies and macroeconomic imbalances in some Member States. Substantial efforts have been made, and will continue to be made, on various fronts in order to defend the EMU and the euro as well as take stock of the importance of monetary integration to restore confidence in world markets, and, closer to home, to benefit European citizens and businesses.
See also IP/11/1596

DG ECFIN website:
Provisional figures for October 2011, European Central Bank.
The European Commission is status neutral in relation to Kosovo. (UN Security Council Resolution 1244/99).