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Setting the scene
The euro was created by the 1992 Maastricht Treaty as a way to deepen European integration and prevent future wars by binding economies together. The currency existed electronically since January 1, 1999, used for banking and stock markets, but physical euros didn't exist. Eleven countries initially joined: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain. Greece joined in 2001. The European Central Bank in Frankfurt managed monetary policy, while national central banks implemented it.
What happened
On January 1, 2002, at midnight, euro banknotes and coins entered circulation in 12 countries, replacing francs, marks, lira, pesetas, and other currencies. The largest cash changeover in history involved 15 billion banknotes and 50 billion coins worth €664 billion. Banks had stockpiled euros for months. For two months, old currencies circulated alongside euros, then were withdrawn. The euro notes featured fictional bridges and windows representing European architectural styles, while coins had a common side and national sides. The changeover went smoothly, with few technical problems.
Why it still matters
The euro's introduction created the world's second-most important currency after the dollar, used by 340 million people. It eliminated exchange rate risk and transaction costs within the eurozone, boosting trade and integration. However, the euro also created problems—member states lost control of monetary policy and couldn't devalue to regain competitiveness, contributing to the 2010 eurozone crisis. The euro became a symbol of European unity but also of the EU's democratic deficit, as monetary policy was set by unelected technocrats. The currency survived its crisis and expanded to 20 members by 2023, demonstrating that monetary union without fiscal union is possible but fragile.
Background
It became one of the largest currency transitions in history.