The euro

Ø 1) Before reading the text answer the questions:

a) What is the European currency called?

b) Do you happen to know when it was introduced?

c) What color or colors are the banknotes? Have you ever seen any banknotes or coins of European currency?

(1) The name “euro” was officially adopted on 16 December 1995. The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit (ECU) at a ratio of 1: 1. Euro coins and banknotes entered circulation on 1 January 2002. The plural forms are the same, “euro” and “cent, ” because of different languages in the EU. The sign is €, the code is EUR. It is also legal to simply write “euro.”

(2) There are 7 different euro banknotes: €5 (grey), €10 (red), €20 (blue), €50 (orange), €100 (green), €200 (yellow), €500 (purple). Each banknote is dedicated to an artistic period of European architecture. The front of the note features windows or gateways while the back has bridges. Some of the highest denominations such as the €500 are not issued in all countries, though they remain legal tender throughout the Eurozone.

(3) The euro is divided into 100 cents. The coins are issued in €2, €1, 50c, 20c, 10c, 5c, 2c, and 1c denominations. In order to avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands (by voluntary agreement) and in Finland (by law).

(4) All circulating coins have a common side showing the denomination or value, and a map in the background. For the denominations except the 1-, 2- and 5-cent coins that map only showed the 15 Member States which were members of the Eurozone when the euro was introduced. Beginning in 2007 the old map is being replaced by a map of Europe also showing countries outside the Union, like Norway. The 1-, 2- and 5-cent coins, however, keep their old design, showing a geographical map of Europe with the 15 Member States of 2002 raised somewhat above the rest of the map. The coins also have a national side showing an image specifically chosen by the country that issued the coin. Euro coins from any Member State may be freely used in any nation which has adopted the euro.

(5) Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin. These include both commonly issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, and nationally issued coins, such as the coin to commemorate the 2004 Summer Olympics issued by Greece. These coins are legal tender throughout the Eurozone. Collector’s coins with various other denominations have been issued as well, but these are not intended for general circulation, and they are legal tender only in the Member State that issued them.

(6) The euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the Eurozone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Eurosystem participates in the printing, minting and distribution of notes and coins in all Member States, and the operation of the Eurozone payment systems.

(7) The euro is the second largest reserve currency and the second most traded currency in the world after the U.S. dollar.

(8) The euro is the sole currency of 16 of the 27 EU Member States as of 2010: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. These countries comprise the “Eurozone” or “Euro Area.” Outside the EU, the euro is also the sole currency of Montenegro and Kosovo and several European micro states (Andorra, Monaco, San Marino and Vatican City) as well as in three overseas territories of EU states that are not themselves part of the EU (Mayotte, Saint Pierre and Miquelon and Akrotiri and Dhekelia).

(9) Outside the Eurozone, a total of 23 countries and territories which do not belong to the EU have currencies that are directly pegged to the euro. Pegging a country’s currency to a major currency is regarded as a safety measure, especially for currencies of areas with weak economies. The euro is seen as a stable currency; it prevents runaway inflation and encourages foreign investment due to its stability.

Ø 2) Find the information on these points in the text:

a) the countries that have the euro as the sole currency as of 2010,

b) the organizations that manage and administer the euro,

c) the number of countries that are pegged to the euro outside the Eurozone,

d) the date of introduction of the term euro,

e) the beginning of the euro circulation,

f) commemorative coins that have legal tender throughout Eurozone,

g) the denominations of the euro banknotes,

h) the denominations of the euro coins.

Ø 3) Point out the problems that are discussed in this text: the term “euro, ” the structure of the euro, the look of the banknotes and coins, comparison with the American dollar, commemorative coins, the names of the famous euro coin collectors, organizations managing and administering the euro, the countries of the euro sole currency, Russia’s plans to peg its currency to the euro, the outside Eurozone countries directly pegged to the euro currency.