The history of the euro all began in Madrid, Spain back in 1995 when the newly formed European Council introduced the idea of a common currency that all of the member counties would use. The European Central Bank (ECB) was established in June of 1998. It is based in Frankfurt, Germany and aims to maintain price stability and to conduct a single monetary policy across the euro area. In January of 1999 the exchange rates of the participating currencies were set and the member countries began implementing a common monetary policy. The euro was introduced as the legal currency and the local currencies of the participating states became subdivisions of the euro. At this time it was only an electronic currency. Finally, by January of 2002 new banknotes and coins went into circulation along with phasing out the old currencies.
This is the largest monetary changeover the world has ever seen and its successful development is central to the realization of a Europe in which people, services, capital and goods can move freely about.
The participating countries include Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal and Finland. Also these countries wanted a strong, stable currency that would command their citizen?s confidence and ease the conditions for cross border commerce. Another goal of the introduction of the euro was to even out prices between different European countries, increasing competition and benefiting consumers.
The smooth launch of the euro as a cash currency has demonstrated that the public is willing to accept the credibility of the currency, and that businesses were prepared to pay the costs of transition. Currently investors are doing more and more business in euros, and central banks are stocking up on euros as a reserve currency. The euro is now firmly established as...