Euro cash (EUR)
When travelling to Europe, it goes without saying that Euros, including in the form of cash, are actually compulsory to buy and use — only a small proportion of European countries use national currencies.
A bit of history
There is no point in diving into the depths of centuries when the Holy Roman Empire's thaller was the de facto European currency, but even in recent history, attempts to introduce a single European currency have been made for decades. Members of the European Economic Community began to take up the issue in earnest in the 1960s. And in 1979, the European Currency Unit, also known as the ECU, was introduced into circulation.
The value of the ECU was formed based on a basket of national currencies of the EEC members. Their shares changed over time, but throughout the history of the ECU, the key national currencies in the basket were the German mark, the French franc, the British pound sterling, and the Dutch guilder.
However, the ECU still could not be called a full-fledged currency. It existed only in non-cash form, and although national central banks used it for settlements, it was mainly a unit of account for financial reporting.
Work on creating a full-fledged single European currency intensified in 1989, with France acting as the "driving force". For example, Germany joined this process exclusively in exchange for French support and recognition of the unification of the FRG and GDR.
Formally, the euro was created in 1992 with the signing of the Maastricht Agreement. At the same time, the criteria to be fulfilled by countries to join the eurozone were established. However, the preparation of infrastructure and harmonization of practical details took almost seven more years.
The euro was introduced into circulation on 1 January 1999, initially in non-cash form only. The transition period, when national currencies remained legal tender and euro cash was gradually introduced, lasted until 2002. At the same time, national currencies were de facto turned into euro denominations — their exchange rates were rigidly linked to the single European currency.
Since then, the eurozone has expanded several times. The latest country to join so far is Croatia, whose national currency has been replaced by the euro as of 1 January 2023.
However, the "peak of the euro's power" remains the period of 2006-2007. At that time, the euro's share in the world's currency reserves reached 27-28 per cent, and even US Federal Reserve officials said that the euro could displace the dollar from the pedestal of "the world's main currency". However, the eurozone crisis of 2008-2011 ended these forecasts. Now, the euro competes with the yuan rather than the dollar.
Global use of the euro
As already mentioned, the euro is the only currency used in the countries of the so-called eurozone. The national banks of these countries are also authorized to issue euros. At the moment, there are twenty such countries:
- Germany
- France (including overseas territories)
- The Netherlands (only in the European part of the country. Caribbean colonies use either the US dollar or their currencies pegged to the dollar)
- Austria
- Italy
- Belgium
- Spain
- Portugal
- Greece
- Cyprus (excluding the unrecognized Republic of Northern Cyprus)
- Malta
- Ireland
- Luxembourg
- Slovakia
- Slovenia
- Finland
- Latvia
- Lithuania
- Estonia
- Croatia.
Bulgaria and Romania have declared their intentions to join the eurozone.
In addition, the euro is used in the four dwarf states of Europe (Vatican City, Monaco, San Marino and Andorra), which are bound to the EU by monetary agreements, as well as in Kosovo and Montenegro. These countries have adopted the use of the euro unilaterally. They do not comply with eurozone requirements and do not issue the euro, but they still use it as a means of domestic payment.
However, it should be remembered that not all EU countries use the euro. In addition to the already mentioned Bulgaria and Romania, Denmark, Czech Republic, Sweden, Hungary, and Poland use national currencies. Denmark has agreed with the EU to keep its national currency; the other four countries are formally obliged to switch to the euro, but the terms of transition are not set, and there are no plans to switch to the euro.
In addition, it is worth remembering that Switzerland and Liechtenstein are not part of the EU and use the Swiss franc rather than the euro.
Several national currencies (mainly in Africa, Europe and Oceania) are tightly pegged to the euro. In addition, the European currency is used in Zimbabwe (along with the US dollar and several other currencies) as a means of payment. Cuba, Venezuela and Syria use the euro for international trade.
And despite all the trials and crises, the European currency remains steadily the second reserve currency and the second most traded currency in the world.
In other words, the euro is not only a European currency but a truly global currency that impacts the world.
Euro (EUR) ñash
One euro consists of 100 cents, commonly referred to as "euro cents", to differentiate it from the dollar.
Coins
There are coins in circulation in denominations of 1, 2, 5, 10, 20, 20, 50 cents, 1 and 2 euros.
The coin reverses are standardized, showing the coin's denomination and the globe (on the 1, 2 and 5 cent coins) or a map of Europe (on all other coins issued after 2007).
On the older "large" coins, instead of a complete map of Europe, a stylised map of the first 15 members of the Eurozone is minted.
The obverse of the coins are national. All eurozone member states have the right to use their obverse designs. In addition, 4 dwarf states (Vatican City, Monaco, San Marino and Andorra) minted their coins with national obverses, but these coins are primarily collector coins.
Banknotes
There are banknotes in circulation in denominations of €5, €10, €20, €50, €100, €200 and €500. The most common of these is €50 — almost half of the total number of banknotes issued are in this denomination.
Unlike coins, there are no national elements on banknotes — they are the same throughout the eurozone.
Each banknote is assigned a different colour and theme — a period in European architecture. The reverse of each banknote shows a map of Europe and a stylised image of a bridge of the corresponding architectural period. On the obverse is the flag of the European Union and a stylised image of an arch or window of the relevant architectural period. Images of real architectural monuments are not used.
- 5 euros — grey banknote, classical architecture;
- 10 euros — red banknote, Romanesque architecture;
- 20 euros — blue banknote, Gothic architecture;
- 50 euros — orange banknote, Renaissance architecture;
- 100 euros — green banknote, Baroque and Rococo;
- 200 euros — yellow banknote, Art Nouveau (Art Nouveau);
- 500 euros — purple banknote, architectural modernism.
The 2013 update of the banknote range did not change the colour coding and architectural themes. Only new security elements and a portrait of mythical Europe on the obverse were added.
Euro banknotes have become a role model in the global market. Many countries borrowed stylistics, colour coding and individual design elements. Azerbaijan simply ordered the design of its banknotes from Robert Kalina, the creator of the euro design.
Use of cash in the euro area
The prevalence of cash payments varies widely across the eurozone. In Slovakia, for example, more than 75 per cent of retail transactions are made in cash, while in Finland, it is less than 17 per cent. At the same time, some retail outlets in Scandinavian countries do not accept cash in principle. So, without a bank card in some EU countries, it will be frankly uncomfortable.
You should also remember the practice of rounding cash transactions, which is common in some European countries — transactions are rounded to the nearest 5 cents, and coins of 1 and 2 cents are not used. While in the Netherlands and Ireland, this is "only" a common practice, in Italy and Finland, it is a legal requirement.
A more significant problem, however, is that some retail outlets do not accept large denominations (500 and sometimes 200 euros). Unlike rounding, this practice is widespread despite calls from the European Commission to stop it.
