Euro Launches

Setting the scene

The euro launched on January 1, 1999, as an accounting currency for 11 European Union countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain. The euro replaced national currencies for electronic transactions, though physical euro coins and notes did not circulate until January 1, 2002. Exchange rates were irrevocably fixed on December 31, 1998.

What happened

The euro was the culmination of decades of European integration, intended to create a single market with a single currency, eliminate exchange rate risk, and bind Germany to Europe. The European Central Bank was established in Frankfurt to manage monetary policy. Britain, Denmark, and Sweden opted out. Greece joined in 2001.

Why it still matters

The euro created the world's second-largest reserve currency and facilitated trade and travel. It also created challenges—member states lost independent monetary policy, contributing to the 2010-2012 eurozone debt crisis. The euro demonstrated that monetary union without fiscal union was fragile. January 1, 1999, marked the most ambitious currency experiment in history, creating a currency used by 340 million people today.

Background

Notes and coins followed in 2002.