Countries Using the Euro as Their Currency

Euro currency
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On January 1, 1999, one of the largest steps toward European unification took place with the introduction of the euro as the official currency in 12 countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain). The establishment of a common currency had the aims of greater economic integration and the unification of Europe as a common market. It also would enable easier transactions between people of different countries by having fewer conversions between so many different currencies. It was also seen as a way to keep the peace.

Key Takeaways: The Euro

  • The goal of the establishment of the Euro was to make European commerce easier and more integrated.
  • The currency debuted in 2002 in a dozen countries. More have since signed on, and additional countries plan to.
  • The euro and the dollar are key to global markets.

At first, the euro was used in trades between banks and tracked alongside the countries' currencies. Then the banknotes and coins came out a few years later for the public to use in everyday transactions. Residents of the first European Union countries that adopted the euro began using the banknotes and coins as of January 1, 2002. People also needed to use up all their cash in the countries' old paper money and coinage before mid-year that year, when they would no longer be accepted in monetary transactions and the euro would be used exclusively.

The Euro: €

The symbol for the euro is a rounded "E" with one or two cross lines: €. Euros are divided into euro cents, each euro cent consisting of one one-hundredth of a euro.

Euro Countries

The euro is one of the world's most powerful currencies, used by more than 175 million Europeans in 19 of 28 EU member countries, as well as some countries that are not formally members of the EU. The countries currently using the euro are:

  1. Andorra (not an EU member)
  2. Austria
  3. Belgium
  4. Cyprus
  5. Estonia
  6. Finland
  7. France
  8. Germany
  9. Greece
  10. Ireland
  11. Italy
  12. Kosovo (not all countries recognize Kosovo as an independent nation)
  13. Latvia
  14. Lithuania
  15. Luxembourg
  16. Malta
  17. Monaco (not in the EU)
  18. Montenegro (not in the EU)
  19. The Netherlands
  20. Portugal
  21. San Marino (not in the EU)
  22. Slovakia
  23. Slovenia
  24. Spain
  25. Vatican City (not in the EU)

Recent and Future Euro Countries

On January 1, 2009, Slovakia started using the euro, and Estonia began using it on January 1, 2011. Latvia joined in on January 1, 2014, and Lithuania began using the euro January 1, 2015.

The EU members the United Kingdom (until the end of March 2019), Denmark, Czech Republic, Hungary, Poland, Bulgaria, Romania, Croatia, and Sweden don't use the euro as of 2018. New EU member countries are working toward becoming part of the eurozone. Romania planned to start using the currency in 2022, and Croatia planned to adopt it in 2024. 

Countries' economies are evaluated every two years to see if they're strong enough to adopt the euro, using figures such as interest rates, inflation, exchange rates, gross domestic product, and government debt. The EU takes these measures of economic stability so that it can evaluate that a new eurozone country would be less likely to need a fiscal stimulus or bailout after joining. The financial crisis in 2008 and its fallout, such as the controversy of whether Greece should be bailed out or leave the eurozone, put some strain on the EU.

Why Some Countries Don't Use It

Great Britain and Denmark are the two countries that, as part of the EU, opted out of adopting the currency—and Great Britain even voted to leave the European Union in the Brexit vote in 2016, so as of April 2019, the currency issue was to be a moot point. The pound sterling is a major currency in the world, so leaders didn't see the need to adopt anything else at the time the euro was created.

Countries that don't use the euro maintain the independence of their economies, such as the ability to set their own interest rates and other monetary policies; the flip side of that is that they must manage their own financial crises and can't go to the European Central Bank for assistance. However, not having an economy interdependent with other countries' economies might make the opted-out countries more nimble in dealing with a widespread crisis that affects countries differently, such as what happened in 2007–2008. It took years for bailouts of Greece to be decided upon, for example, and Greece couldn't set its own policies or take its own measures. A hot-button issue at the time was whether bankrupt Greece was going to stay in the eurozone or bring back its currency. 

Denmark doesn't use the euro but has its currency tied to the euro to maintain the country's economic stability and predictability and to avoid major fluctuations and market speculation on its currency. It is pegged within a 2.25 percent range of 7.46038 krone to the euro. It has a longstanding policy of pegging its currency to another. Before the creation of the euro, the krone was pegged to the German deutsche mark.

Euro vs. Dollar

The dollar has historically been used as a common currency internationally, just like English has been a common language between people of different countries. Foreign countries and investors see U.S. Treasury bonds as safe places to put their money because of stable government behind the dollar; some countries even hold their financial reserves in dollars. The currency also has size and liquidity, needed to be a major world player.

When the euro was first established, the exchange rate was set based on the European Currency Unit, which was based on a collection of European currencies. It generally runs a little higher than the dollar. Its historical low was 0.8225 (October 2000), and its historical high was 1.6037, reached in July 2008 during the subprime mortgage crisis and failure of Lehman Brothers.

Professor Steve Hanke, writing in Forbes in 2018, postulated that setting an exchange rate "zone of stability" formally between the euro and dollar would keep the entire global market stable, because of what happened worldwide following the collapse of Lehman Brothers.