January 4:

1999 : The euro debuts

On this day in 1999, for the first time since
Charlemagne's reign in the ninth century, Europe is
united with a common currency when the "euro" debuts
as a financial unit in corporate and investment
markets. Eleven European Union (EU) nations (Austria,
Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain),
representing some 290 million people, launched the
currency in the hopes of increasing European
integration and economic growth. Closing at a robust
1.17 U.S. dollars on its first day, the euro promised
to give the dollar a run for its money in the new
global economy. Euro cash, decorated with
architectural images, symbols of European unity and
member-state motifs, went into circulation on January
1, 2002, replacing the Austrian schilling, Belgian
franc, Finnish markka, French franc, German mark,
Italian lira, Irish punt, Luxembourg franc,
Netherlands guilder, Portugal escudo and Spanish
peseta. A number of territories and non-EU nations
including Monaco and Vatican City also adopted the
euro.

Conversion to the euro wasn't without controversy.
Despite the practical benefits of a common currency
that would make it easier to do business and travel
throughout Europe, there were concerns that the
changeover process would be costly and chaotic,
encourage counterfeiting, lead to inflation and cause
individual nations to loose control over their
economic policies. Great Britain, Sweden and Demark
opted not to use the euro. Greece, after initially
being excluded for failing to meet all the required
conditions, adopted the euro in January 2001, becoming
the 12th member of the so-called eurozone.

The euro was established by the 1992 Maastricht Treaty
on European Union, which spelled out specific economic
requirements, including high degree of price stability
and low inflation, which countries must meet before
they can begin using the new money. The euro consists
of 8 coins and 7 paper bills. The Frankfurt-based
European Central Bank (ECB) manages the euro and sets
interest rates and other monetary policies. In 2004,
10 more countries joined the EU—-Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta,
Poland, Slovakia and Slovenia. Several of these
countries plan to start using the euro in 2007, with
the rest to follow in coming years.

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