euro (sign: EUR ; code: EUR ) is the official currency of the European Union. Currently, 19 of the 28 member countries use the euro; this group of countries is known as the eurozone. This is the second most traded currency in the foreign exchange market after the US dollar. The euro is divided into 100 cents.
This currency is also officially used by EU institutions and four other European countries, and unilaterally by two others, and consequently is used daily by approximately 337 million Europeans by 2015. Outside of Europe, a number of overseas territories from EU members also use the euro as their currency. In addition, 210 million people worldwide in 2013 use a currency pegged to the euro.
The euro is the second largest reserve currency and the second most traded currency in the world after the US dollar. In January 2017, with more than EUR1.1 trillion in circulation, the euro has one of the highest coins and coins outstanding in the world, after surpassing the US dollar.
The name euro was officially adopted on December 16, 1995 in Madrid. The Euro was introduced to the world financial market as an accounting currency on January 1, 1999, replacing the former European Currency (ECU) at a 1: 1 ratio (US $ 1.1743). Physical coins and banknotes began to circulate on January 1, 2002, making it the day-to-day operating currency of its original members, and in May 2002 had completely replaced the previous currency. While the euro fell further to US $ 0.83 in two years (October 26, 2000), it has traded above the US dollar since late 2002, peaking at US $ 1.60 on July 18, 2008. By the end of 2009, the euro has sunk in European debt crisis, which led to the creation of the European Financial Stability Facility as well as other reforms aimed at stabilizing and strengthening the currency.
Video Euro
Administration
The Euro is managed and managed by the European Central Bank (ECB) based in Frankfurt and Eurosystem (composed of central banks of eurozone countries). As an independent central bank, the ECB has the sole authority to establish monetary policy. Eurosystem participates in the printing, printing and distribution of notes and coins in all member countries, and the operation of the eurozone payment system.
The 1992 Maastricht Treaty obliges most EU member states to adopt the euro after meeting certain criteria of monetary convergence and budget, although not all countries have done so. Britain and Denmark negotiated an exception, while Sweden (who joined the EU in 1995, after the Maastricht Treaty was signed) rejected the euro in a 2003 referendum, and has avoided the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All countries that have joined the EU since 1993 have promised to adopt the euro in due course.
Maps Euro
Issuing modalities for paper money
Since January 1, 2002, the national central banks (NCBs) and the ECB have issued euro banknotes together. The euro banknotes do not show the central bank issuing them. Eurosystem NCBs are required to receive euro banknotes that are put into circulation by other Eurosystem members and these notes are repatriated. The ECB issues 8% of the total value of banknotes issued by Eurosystem. In practice, the ECB banknotes are put into circulation by the NCB, giving rise to the corresponding vis-ÃÆ' -vis ECB obligations. This obligation carries interest at the main refinancing rate of the ECB. The other 92% of euro banknotes are issued by NCBs in proportion to each of their shares of the ECB key capital, calculated using the national share of the EU population and the national part of the EU GDP, equally weighted.
Characteristics
Coins and banknotes
The euro is divided into 100 cents (sometimes referred to as euro penny, especially when distinguishing them from other currencies, and referred to as so on the public side of all coins). In the legislative Community acts the plural forms of euro and cents are spelled without s , despite the normal use of English. Otherwise, plain English forms are sometimes used, with many local variations such as centime in French.
All circulating coins have public sides denoting denominations or values, and maps in the background. Due to the plurality of languages ​​in the European Union, the Latin alphabet version euro is used (as opposed to the less common Greek or Cyrillic) and Arabic numerals (other texts are used on the national side in the national language, but other texts on the side commonly avoided). For denominations except for 1, 2, and 5 cent coins, the map shows only the 15 member countries that are members when the euro is introduced. Starting in 2007 or 2008 (depending on country) old maps replaced by European maps that also show countries outside the Union such as Norway. However, coins 1, 2 and 5 cents, retaining their old designs, show a European geographic map with 15 2002 member states that have been raised somewhat above the rest of the map. All the general sides are designed by Luc Luycx. The coins also have a national side that shows images specifically selected by the coinage state. Euro coins from any member country can be used freely in any country that has adopted the euro.
Coins are issued in denominations of EUR2, EUR1, 50c, 20c, 10c, 5c, 2c, and 1c. To avoid using the two smallest coins, some cash transactions are rounded up to the nearest five cents in the Netherlands and Ireland (by voluntary agreement) and in Finland (by law). This practice is not recommended by the Commission, as is the practice of certain shops that refuse to accept euro-rated notes.
The commemorative coin with the nominal value of EUR2 has been issued with the national coin side design changes. These include generally issued coins, such as the EUR2 commemorative coins for the fiftieth anniversary of the signing of the Rome Agreement, and nationally issued coins, such as coins to commemorate the 2004 Summer Olympics issued by Greece. These coins are a valid means of payment throughout the eurozone. Coin collectors with various other denominations have been issued as well, but these are not intended for general circulation, and they are the only legal means of payment only in the issuing member countries.
The design for euro banknotes has a common design on both sides. This design was created by Austrian designer Robert Kalina. Notes published in EUR500, EUR200, EUR100, EUR50, EUR20, EUR10, EUR5. Each banknote has its own color and is dedicated to the artistic period of European architecture. The front of the note has a window or gate while the back has a bridge, symbolizing the relationship between the state and with the future. While the design should not have identifiable characteristics, the initial design by Robert Kalina was a special bridge, including Rialto and Pont de Neuilly, and then became more generic; the final design still has a very close resemblance to their specific prototype; so they are not really generic. The monuments seem quite similar to the different national monuments to please everyone.
Clearing payment, electronic funds transfer
Capital in the EU may be transferred in any amount from country to country. All intra-UE transfers in euros are treated as domestic transactions and bear the appropriate domestic transfer fees. This includes all EU member states, even those outside the eurozone providing transactions conducted within the euro. Charging of credit/debit cards and ATM withdrawals within the eurozone is also treated as a domestic transaction; but paper-based payment orders, such as checks, have not been standardized so this is still domestically based. The ECB has also set up a clearing system, TARGET, for large euro deals.
Currency mark
A special euro currency sign (EUR) is designed after a public survey narrows the original ten proposals into two. The European Commission then selected a design made by Alain Billiet of Belgium. From the symbol, the EC stated
The inspiration for the EUR symbol itself comes from the Greek epsilon (?) - a reference to the cradle of European civilization - and the first letter of the European word, crossed by two parallel lines to 'endorse' the stability of the euro.
The European Commission also established the euro logo with the right proportions and the foreground and background colors. While the Commission intended the logo to be a specified flying machine form, font designers made it clear that they intended to design their own variants instead. Typewriters that lack the euro mark can make it by typing in capital letters "C", backspacing, and overstriking with equal sign ("="). The placement of a currency sign relative to a numerical amount varies from country to country, but for English text, the symbol (or ISO standard "EUR") must precede the amount.
History
Introduction
The euro was established by the provisions of the 1992 Maastricht Treaty. To participate in the currency, member states are meant to meet strict criteria, such as budget deficits of less than 3% of their GDP, debt ratios of less than 60% of GDP (both ultimately widely harassed after being introduced), inflation is low, and interest rates close to the EU average. In the Maastricht Treaty, Britain and Denmark were granted an exemption upon their request of moving to a monetary union stage which resulted in the introduction of the euro. (For macroeconomic theory, see below.)
The name "euro" was formally adopted in Madrid on December 16, 1995. Belgium Esperantist Germain Pirlot, a former French teacher and history credited with naming the new currency by sending a letter to European Commission President Jacques Santer, suggested the name "euro" on August 4, 1995.
Due to differences in national conventions for rounding and significant digits, all conversions between national currencies should be made using the triangulation process through the euro. The definitive value of one euro in terms of the exchange rate at which the currency entered euro is shown on the right.
Tariffs are determined by the Council of the European Union, on the recommendation of the European Commission based on market rates as of December 31, 1998. They are set so that one European Currency Unit (ECU) will be equal to one euro. The European Currency Unit is an accounting unit used by the EU, based on the currency of member countries; it is not a currency in itself. They can not be set before, because the ECU relies on the exchange rate of the non-euro currency (especially pound sterling) currency that day.
The procedure used to improve the conversion rate between the Greek drachma and the euro is different, since the euro was then two years old. While the conversion rate for eleven initial currencies was determined just hours before the euro was introduced, the conversion rate for the Greek drachma remained a few months earlier.
Currencies were introduced in non-physical form (travel checks, electronic transfers, banking, etc.) at midnight on January 1, 1999, when the national currency of participating countries (eurozone) did not exist independently. Their exchange rate is locked at a fixed price against each other. Euro becomes the successor of the European Currency Unit (ECU). Notes and coins for the old currency, however, continue to be used as a valid means of payment until new banknotes and coins were introduced on January 1, 2002.
The period of change in which used banknotes and coins are exchanged for euro currency lasts for about two months, until February 28, 2002. The official date on which the national currency ceases to be a valid payment instrument varies from member country to member country. The earliest date is in Germany, where the sign officially ceases to be the legal tender on December 31, 2001, although the exchange period lasts for two more months. Even after the old currency ceases to be a valid payment instrument, they remain accepted by the national central bank for a period ranging from a few years to no limit (the latter to Austria, Germany, Ireland, Estonia and Latvia in paper money and coins, and for Belgium, Luxembourg, Slovenia and Slovakia only in the form of banknotes). The earliest coins that became non-convertible were Portuguese escudos, which ceased to have monetary value after December 31, 2002, although paper money remained convertible until 2022.
Eurozone crisis
Following the US financial crisis in 2008, concerns over the emerging sovereign debt crisis in 2009 among investors about some European countries, with the situation becoming very tense in early 2010. Greece is badly affected, but fellow Euro zone members Cyprus, Ireland, Italy, Portugal , and Spain were also significantly affected. All of these countries use EU funds except Italy, which is the main donor of EFSF. To be included in the eurozone, countries must meet certain convergence criteria, but the significance of those criteria is reduced because they are not enforced with the same degree of firmness among countries.
According to the Economist Intelligence Unit in 2011, "[the euro area] is treated as a single entity, the [economic and fiscal] position does not look any worse and in some ways, better than the US or the UK" and the budget deficit for the euro area the overall is much lower and the euro area government's debt/GDP ratio of 86% in 2010 is about the same level as the United States. "Moreover", they wrote, "Private sector debt throughout the euro area as a whole is clearly lower than in the highly leveraged Anglo-Saxon countries". The authors conclude that the crisis "is equally political with the economy" and results from the fact that the euro area lacks the support of "the institutional equipment (and mutual bonds of solidarity) of a country".
The crisis continues with S & amp; P downgraded the credit ratings of nine euro-area countries, including France, and lowered all European Financial Stability Facility (EFSF) funds.
A historical alignment - until 1931 when Germany was weighed down with debt, unemployment and austerity while France and the United States were relatively strong creditor - gained attention in the summer of 2012 even as Germany received its own debt rating warning.
Direct and indirect use
Direct use
Euro is the single currency of 19 EU member states: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain. These countries are the "eurozone", about 332 million people in total in 2013.
With all but two remaining EU members obliged to join, along with future EU members, the expansion of the eurozone will continue. Outside the European Union, the euro is also the single currency of Montenegro and Kosovo and some European microcountries (Andorra, Monaco, San Marino and Vatican City) as well as in the four overseas territories of EU members who are not part of the EU (Saint BarthÃÆ'Â © lemy, Saint Pierre and Miquelon, South and Antarctic Land of France and Akrotiri and Dhekelia). Together this direct use of the euro outside the EU affects nearly 3 million people.
The euro has been used as a trading currency in Cuba since 1998, and Syria since 2006. There are also various currencies pegged to the euro (see below). In 2009, Zimbabwe left its local currency and used major currencies, including the euro and the US dollar.
Use as a reserve currency
Since its introduction, the euro has become the second most widely held international reserve currency after the US dollar. The share of the euro as reserve currency increased from 18% in 1999 to 27% in 2008. During this period, the shares held in US dollars fell from 71% to 64% and those held in the Yen fell from 6.4% to 3 , 3%. Euro inherited and built on Deutsche Mark's status as the second most important reserve currency. The euro remains underweight as a reserve currency in developed countries while excess in developing and developing economies: according to the International Monetary Fund the total euro held as reserves in the world by the end of 2008 equals $ 1.1 trillion or EUR850 billion, with a share of 22% all currency reserves in developed countries, but a total of 31% of all currency reserves in developing and developing countries.
The possibility of the euro becoming the first international reserve currency has been disputed among economists. Former Federal Reserve Chairman Alan Greenspan gave his opinion in September 2007 that "it is perfectly conceivable that the euro will replace the US dollar as a reserve currency, or will trade as an equally important reserve currency". In contrast to the 2007 assessment at Greenspan, the euro's increase in the share of the world's reserve currency basket has been slowing since 2007 and since the start of the world credit crisis related to recession and the sovereign debt crisis of Europe.
Currency set to euro
Outside of the euro zone, a total of 22 countries and territories that do not belong to the European Union have currencies directly pegged to the euro including 13 countries in mainland Africa (CFA franc), two African island nations (Comorian franc and Cape Verde escudo), three territories The French Pacific (CFP franc) and the three Balkans, Bosnia and Herzegovina (Bosnia and Herzegovina convertible signs), Bulgaria (Bulgaria lev) and Macedonia (Macedonian denar). On July 28, 2009, SÃÆ' £ o Tomà ©  © and PrÃÆ'ncipe signed an agreement with Portugal that will eventually tie up its currency to the euro. In addition, the Moroccan dirham is linked to a number of currencies, including the euro and the US dollar, with the euro being given the highest weighting.
With the exception of Bosnia, Bulgaria, Macedonia (which have pegged their currency to Deutsche Mark) and Cape Verde (previously pegged to Portuguese escudo), all of these non-EU countries have currency against French francs before grouping them. currency to euro. Setting a country's currency into a major currency is considered a safety measure, especially for the region's currency with a weak economy, as the euro is seen as a stable currency, preventing rising inflation and encouraging foreign investment because of its stability.
Within the European Union, some currencies are pegged against the euro, largely as a prerequisite for joining the eurozone. Levian Bulgaria was previously pegged to Deutsche Mark; one other EU currency with a direct benchmark because ERM II is a Danish krone.
In total, in 2013, 182 million people in Africa use the currency pegged against the euro, 27 million people outside the eurozone in Europe, and 545,000 others on the Pacific islands.
Since 2005, stamps issued by the Sovereign Sovereign Order of Malta have been denominated in euros, although the official currency of the Order remains a Maltese. The Maltese scudo itself is pegged to the euro and is only recognized as a legitimate means of payment in the Order.
Economy
Optimum currency area
In an economy, the optimal currency area, or region (OCA or OCR), is a geographic area where it will maximize economic efficiency to make the whole region share the single currency. There are two models, both proposed by Robert Mundell: the stationary expectations model and the international risk-sharing model. Mundell himself advocated an international risk-sharing model and thus concluded in favor of the euro. However, even before the creation of the single currency, there was concern over a deviant economy. Before the late 2000s recession, it was considered unlikely that a country would leave the euro or the entire zone would collapse. But the Greek government debt crisis led to former British Foreign Secretary Jack Straw claiming that the euro zone can not survive in its current form. Part of the problem seems to be the rule that was created when the euro was formed. John Lanchester, writing for The New Yorker , explains it:
Transaction costs and risks
The most obvious benefit of adopting a single currency is to eliminate the cost of currency exchange, theoretically allowing businesses and individuals to conduct previously unfavorable trades. For consumers, banks in the eurozone should charge the same fees for intra-country cross-country transactions as pure domestic transactions for electronic payments (eg credit cards, debit cards and cash withdrawals).
Financial markets on this continent are expected to be much more fluid and flexible than in the past. Reduced cross-border transaction costs will allow larger banking companies to provide a wider range of banking services that can compete across and outside the eurozone. However, despite the reduced transaction costs, several studies have shown that risk aversion has increased over the last 40 years in the Eurozone.
Price similarity
Another effect of the European currency is the price difference - especially in the price level - should decrease due to the law of one price. Price differences can trigger arbitration, that is, speculative trading in pure cross-border commodities to exploit price differences. Therefore, the prices of traded goods tend to coalesce, causing inflation in some areas and deflation in other countries during the transition period. Some of this evidence has been observed in certain eurozone markets.
Macroeconomic stability
Prior to the introduction of the euro, some countries had managed to contain inflation, which was then seen as a major economic problem, by establishing a largely independent central bank. One such bank is the Bundesbank in Germany; The European Central Bank is modeled on the Bundesbank.
The euro gets criticized for imperialistic style rules, lack of flexibility and rigidity to member countries sharing on issues such as nominal interest rates. Many of the national and corporate bonds in the euro are significantly more liquid and have lower interest rates than historically the case when denominated in the national currency. While an increase in liquidity may lower the nominal interest rate on bonds, denominations of bonds in currencies with low levels of debatable inflation play a much larger role. A credible commitment to low inflation and stable debt reduces the risk that the value of the debt will be eroded by a higher rate of inflation or default in the future, allowing debt to be issued at a lower nominal interest rate.
Unfortunately, there is also a cost in keeping inflation structurally lower than in the United States, Britain, and China. The result is visible from those countries, the euro has become expensive, making European products more expensive for its biggest importers. Therefore, exports from the euro zone are becoming more difficult.
In general, those in Europe who have a large number of euros are served by high stability and low inflation.
Trading
The 2009 consensus of a study on the introduction of the euro concluded that it had increased trade in the eurozone by 5% to 10%, although one study suggested an increase of only 3% while another estimated 9 to 14%. However, the meta-analysis of all available studies shows that the prevalence of positive estimates is due to publication bias and that the underlying effects are negligible. Furthermore, accounting studies for time trends reflecting the prevalent European cohesion policy that began earlier, and continued after applying the common currency found no effect on trading. These results suggest that other policies aimed at European integration may be a source of observed improvements in trade.
Investment
Physical investment seems to have risen 5% in the eurozone due to introduction. Regarding foreign direct investment, a study found that intra-eurozone FDI shares have increased by about 20% during the first four years of EMU. Regarding the effect on corporate investment, there is evidence that the introduction of the euro has resulted in an increase in investment rates and it has made it easier for companies to access financing in Europe. The euro has specifically stimulated investment in firms from countries that previously had weaker currencies. A study found that the introduction of euro accounts to 22% of the level of investment after 1998 in countries that previously had a weak currency.
Inflation
The introduction of the euro has led to widespread discussion about the possible effects on inflation. In the short term, there is a widespread impression in the euro zone population that the introduction of the euro has led to price increases, but this impression is not confirmed by the general index of inflation and other studies. A study of this paradox finds that this is due to the asymmetric effect of the introduction of the euro on prices: while it has no effect on most goods, it has an effect on the cheap goods that have seen their prices accumulate after the introduction of euro currency. The study found that consumers base their belief on the inflation of cheap goods that are often purchased. It has also been suggested that the leap in the small price may be because before the introduction, the retailer made a slight upward adjustment and waited for the introduction of the euro to do so.
Exchange rate risk
One of the advantages of adopting a common currency is the reduction of risk associated with changes in currency exchange rates. It has been found that the introduction of the euro created "a significant reduction in market risk exposure for non-financial companies both inside and outside Europe". Reductions in market risk "are concentrated in companies domiciled in the eurozone and in non-euro companies with high fractions of foreign sales or assets in Europe".
Financial integration
The introduction of the euro seems to have a strong effect on European financial integration. According to a study of this question, he has "significantly altered the European financial system, especially with respect to securities markets [...] However, the real barriers and policies for integration in the retail and corporate banking sectors remain significant, even if the bulk of the banking stock is partially large has been integrated. "In particular, the euro has significantly lowered the cost of trading bonds, equities, and banking assets within the eurozone. At a global level, there is evidence that the introduction of the euro has led to integration in terms of investment in bond portfolios, with borrowing of euro zone countries and borrowing more than each other than with other countries.
Effect on interest rate
Since January 2014, and since the introduction of the euro, interest rates for most member countries (especially those with weaker currencies) have declined. Some of these countries have the most serious state financing problems.
The effect of interest rate reductions, combined with the excess liquidity that the ECB continues to provide, makes it easier for banks in countries where interest rates fall at most, and their associated countries borrow significant amounts (above 3% of the deficit GDP budget imposed on eurozone at first) and significantly increase their public and private debt levels. Following the 2007-2008 financial crisis, governments in those countries felt it necessary to redeem or nationalize private banks to prevent the failure of a systemic banking system when the value of underlying financial or financial assets was found to be very bloated and sometimes so close there is no liquid market for them. This further increased the already high level of public debt to market levels began to consider unsustainable, through increasing interest rates on government bonds, resulting in the ongoing European sovereign debt crisis.
Price convergence
Evidence of price convergence in the euro zone with the introduction of the euro varies. Some studies failed to find evidence of convergence after the introduction of the euro after the convergence phase in the early 1990s. Other studies have found evidence of price convergence, especially for automobiles. The possible reason for the difference between the different studies is that the convergence process may not be linear, slowing substantially between 2000 and 2003, and reappearing after 2003 as suggested by recent research (2009).
Tourism
A study shows that the introduction of the euro has had a positive effect on the number of tourist trips in the EMU, with an increase of 6.5%.
Exchange rate
Flexible exchange rate
The ECB targets interest rates rather than exchange rates and generally does not intervene in the foreign exchange market. This is because of the implications of the Mundell-Fleming model, which implies that the central bank can not (without capital control) keep interest rates and exchange rate targets simultaneously, as increasing the money supply results in currency depreciation. In the years after the European Single Law, the EU has liberalized the capital market and, because the ECB has inflation targeting as its monetary policy, the euro exchange rate regime is floating.
Against other major currencies
The euro is the second most reserve currency held after the US dollar. After its introduction on January 4, 1999, the exchange rate of its currency against other major currencies fell to its lowest exchange rate in 2000 (October 25 vs. US dollars, Oct. 26 vs. Japanese Yen, May 3 vs Pound Sterling). After that it returned and its exchange rate reached its historic high point in 2008 (July 15 vs. US dollar, July 23 vs. Japanese Yen, December 29 vs. Pound Sterling). With the advent of the global financial crisis, the euro initially fell, to regain later. Despite pressure due to Europe's sovereign debt crisis, the euro remains stable. In November 2011, the euro exchange rate index - measured against the currencies of major trading partners of the bloc - traded nearly two per cent higher that year, roughly at the same rate as before the crisis began in 2007.
- The current and historical exchange rate against 29 other currencies (European Central Bank)
- Current dollar/euro exchange rate (BBC)
- Historical exchange rate from 1971 to now
Linguistic issues
Source of the article : Wikipedia
0 Comments