The European Union

THE EUROPEAN UNIONLesson 6

How do individuals, businesses and economies benefit from using the Euro?

The European Union

The Euro

In 1999, the euro area was established as a currency in eleven of the then fifteen EU Member States.

Of the 27 EU Member States today, seventeen have adopted the euro. Estonia is the most recent member, having joined in Jan. 2011.

One of the striking benefits of a single European currency are low interest rates due to a high degree of price stability.

The euro is as stable and credible as the best-performing currencies previously used in the euro area countries.

€

€

€

€

The European Union

Before the Euroa multitude of currencies

Diversity of currencies:

• Cumbersome inter-state trading• Comparing prices more difficult• Currency exchange can be unpredictable in contracts/ loans

The European Union

The Euroa single currency for Europeans

• Austria• Belgium• Finland• France• Germany• Greece

• Italy• Ireland• Luxembourg• Netherlands• Portugal• Spain

The 12 countries which introduced the Euro in 2001:

The European Union

The Euroa single currency for Europeans

EU countries using the euro in 2011EU countries part of ERM II (in between)EU countries not using the euro

Can be used everywhere in the euro area

Coins: one side with national symbols, one side common Notes: no national side

New Euro countries since 2001:

• Cyprus (2006)• Malta (2006)• Slovakia (2008)

•Slovenia (2009)• Estonia (2011)

The European Union

Some of the Euro’s benefits• European Central Bank keeps price inflation low so interest rates also remain low

• Currency exchange costs are eliminated

• Travelling is made easier

• Comparing prices is made simpler

• International trade is facilitated

• Inflation remains low and stable

The European Union

United in Diversity - The €uro

The European Union

United in Diversity - The €uro

The European Union

European Central Bank

• The European Central Bank (ECB) is the central bank for Europe's single currency, the euro.

• The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area.

• The euro area comprises the 17 European Union countries that have introduced the euro since 1999.

• The ECB operates independently from Member State governments.

The euro was introduced in 1999