Germany and the euro - European Commission European Commission Communicating on the euro Germany and the euro Germany is a founding member of the European Union and one of the first-wave countries to adopt the euro on 1 January 1999. Last update: 4 may 2009 Germany at a glance Surface area: 357 030 km2 Population: 82 062 249 (Eurostat 2009) Joined the European Union: Founding member (25 March 1957) Currency: Euro since 1 January 1999 (formerly German mark, DEM or DM) Euro information Status: Euro-area member since 1 January 1999 Fixed conversion rate: €1 = 1.95583 DEM Adoption of the euro: The euro banknotes and coins were introduced in Germany on 1 January 2002, after a transitional period of three years when the euro was the official currency but only existed as 'book money'.

The legal tender status of the German mark banknotes and coins ended on 31 December 2001, but they were accepted as payment until 28 February 2002 by virtue of a joint declaration from retail and banking associations. Exchange of former national currency: The Deutsche Bundesbank (National Central Bank of Germany) will continue to exchange unlimited amounts of mark notes and coins for an unlimited period. Opinion polls and surveys Euro: the common currency explained - World - CBC News Euro: the common currency explained How Europe's currency came to be and how it's used today By Kazi Stastna, CBC News Posted: Dec 09, 2011 4:20 AM ET Last Updated: Dec 09, 2011 4:16 AM ET Then European monetary affairs commissioner Yves-Thibault de Silguy, left, and president of the European Commission Jacques Santer hold a model of a euro coin prior to a news conference in Brussels on May 1, 1998. The euro was introduced as a unit of accounting a year later; bills and coins began circulating in 2002.

(Nathalie Koulischer/Reuters) Related Stories European Commission: the euro (Note: CBC does not endorse and is not responsible for the content of external links.) The current debt crisis in Greece and other Eurozone countries has cast an existential cloud over the 20th anniversary of the Maastricht Treaty, the agreement signed on Feb. 7, 1992 that created the European Union and established the euro. The euro is the common currency used by 17 of the 27 members states of the European Union. It was introduced as a so-called unit of account — i.e. currency used only in financial transactions on paper — in 1999 and as actual circulating banknotes and coins in January 2002. Any country that enters the EU must commit to eventually adopting the euro once it is able to meet the necessary criteria. Only Denmark and the U.K. have been granted exemptions to this rule and have opted out of the euro completely. Sweden has committed to adopting the euro in the future, but it hasn't yet made the necessary legislative changes and exchange rate adjustments required for entry into the "eurozone" — the countries using the euro.

Eurozone countries Eurozone population: 332 million EU population: 503 million In the countries that make up the eurozone, the euro has replaced the national currency. Some national banks will allow you to exchange the old currency indefinitely, but others have set an expiration date on how long they will accept it. The Bank of France, for example, will exchange francs only up until Feb. 17, 2012. Countries that don't use the euro generally don't accept it for regular cash transactions, although some large department stores and tourist-dependent businesses in the U.K., for example, have been accepting payment in euros. How to join There are five main criteria countries must meet to join the eurozone. These are often referred to as the Maastricht criteria after the Maastricht Treaty, which laid out the integrated structures of the European Union and set a timetable for the adoption of a single currency. Maastricht criteria Inflation: the rate of inflation may not be more than 1.5 percentage points above the average rate of inflation of the three EU member states with the lowest inflation over the previous year. Budget deficit: national budget deficits must be at or below three per cent of GDP.

Public debt: national public debt must not exceed 60 per cent of GDP. A country can still join if its debt exceeds this level provided it is falling steadily. Interest rates: long-term interest rates must not vary by more than two percentage points from the average interest rates of the three EU member states with the lowest inflation over the previous year. Exchange rates: exchange rates must remain within the accepted margin of fluctuation laid out in the Exchange Rate Mechanism (ERM) for two years prior to entry. (The ERM is the mechanism by which EU members linked their currencies in order to prevent large fluctuations prior to the adoption of the euro.) The reality is that many current eurozone members do not meet all the Maastricht requirements, and many blame Europe's current debt problems on a failure to take swift enough action against countries that failed to adhere to the debt and deficit ceilings. The European Commission estimates that the average debt burden for the euro area will be 88 per cent of GDP in 2011 and 90.4 per cent in 2012 — far above the required 60 per cent cap.

Germany, the largest euro economy, is forecast to have debt equivalent to 81.7 per cent of GDP in 2011 while Greece's debt is expected to rise to 150.9 per cent of GDP. The average budget deficit for the euro area is expected to be 4.1 per cent of GDP in 2011 and as high as nine or 10 per cent in Greece. Eurozone enforcers There are several organizations in charge of keeping Europe's unified currency and, more broadly, its integrated monetary policies on track. A sculpture of the euro currency sign outside the European Central Bank in Frankfurt. The ECB is in charge issuing banknotes and setting monetary policy for the eurozone. (Alex Domanski/Reuters) European Central Bank (ECB) — based in Frankfurt, it sets monetary policy for the eurozone, issues euro banknotes, sets interest rates, keeps inflation low. European Council — made up of the heads of state of EU member states, it sets the EU's main policy orientations. Council of the EU (also known as the Council or the Council of Ministers) — part of the EU legislature, made up of one minister from each member state.

There are 10 council configurations based on policy areas. The economic configuration co-ordinates EU economic policy and decides whether a member state may adopt the euro. European Commission — it is the main body in charge of enforcing EU regulations and policies and also proposes legislation. It monitors eurozone members' performance and compliance. Eurogroup — an informal grouping of euro area finance ministers that co-ordinates and monitors economic and budgetary policies and represents the euro area at international forums. EU member states also adopted a Stability and Growth Pact in 1997 intended to get countries to adhere to the Maastricht Treaty and maintain common EU-wide fiscal policies. It contains something called the excessive deficit procedure, or EDP, that kicks in once a member state exceeds the three per cent debt ceiling and establishes a deadline by which corrective action must be taken. However, it also says that the procedure won't be used if the excess deficit is temporary or exceptional and within range of the ceiling. The recent debt crisis has forced the eurozone to adjust the Maastricht criteria and set new debt targets for countries like Greece , whose revised budget deficit target, for example, was upped to 7.5 per cent of GDP.

Advantages and disadvantages of a common currency Advantages Common currency vs. common market While not all countries in the European Union are part of the eurozone, they are all part of a common market, meaning they have abolished trade barriers, customs tariffs, border controls and other impediments to the free movement of goods, capital, labour and services across national borders. In some areas, such as product regulation and consumer protection, the EU has adopted a policy of mutual recognition of national rules, meaning products legally sold in one country can be sold in any other member state. The eyes of the world are on Angela Merkel, the chancellor of Germany, the eurozone's strongest economy, as she struggles to solve the EU's debt crisis. While not all EU members are part of the eurozone, they are all part of a heavily integrated common market. (Sebastien Pirlet/Reuters) While European member states attempt to co-ordinate their broader economic policies, state governments retain control over taxes, government spending, labour, pensions and capital markets. The raison d'être of the EU has always been some form of common market.

The entity itself originated as the European Coal and Steel Community in 1951 as a way of creating a common market for coal and steel among Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands. That evolved into the European Economic Community six years later, which expanded the common market to other goods and services, and by the 1960s, the six countries had abandoned customs duties and adopted common policies on trade, agriculture and in other areas. It wasn't until the 1970s that the union expanded beyond economic imperatives to include social and environmental policies and, in 1979, the first elected European Parliament. That year, it also adopted the European Monetary System, which aimed to keep currency fluctuations in check by pegging exchange rates to the European Currency Unit (ECU), a currency that existed only as an accounting unit and was based on a weighted average of the currencies of the by then nine countries that made up the European Economic Community. Exchange rates had to be changed by mutual agreement and could fluctuate only within a narrow margin established under the Exchange Rate Mechanism the member states had created.

Today, the EU has common policies on everything from air pollution to immigration, but, as the recent debt crisis has made all too clear, it still lives and dies on the basis of its economic integration. ExchangeRate.com - Currency Information German Euro Also See: The german mark The euro (sign: €; code: EUR) is the official currency of the Eurozone: 16 of the 27 Member States of the European Union (EU) and is the currency used by the EU institutions. The eurozone consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.Estonia is due to join the eurozone on 1 January 2011.The currency is also used in a further five European countries, with and without formal agreements, and is consequently used daily by some 327 million Europeans.Over 175 million people worldwide use currencies which are pegged to the euro, including more than 150 million people in Africa. The euro is the second largest reserve currency (a status it inherited from the German mark) as well as the second most traded currency in the world after the U.S.

dollar.As of June 2010, with more than €800 billion in circulation, the euro is the currency with the highest combined value of banknotes and coins in circulation in the world, having surpassed the U.S. dollar. Based on IMF estimates of 2008 GDP and purchasing power parity among the various currencies, the eurozone is the second largest economy in the world. 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. Administration 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.

The 1992 Maastricht Treaty obliges most EU Member States to adopt the euro upon meeting certain monetary and budgetary requirements, although not all states have done so. The United Kingdom and Denmark negotiated exemptions,while Sweden turned down the euro in a 2003 referendum, and has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. CHARACTERISTICS Coins and banknotes The euro is divided into 100 cents (sometimes referred to as euro-cents, especially when distinguishing them from other currencies). In Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage.Otherwise, normal English plurals are recommended and used;with many local variations such as for example 'centime' in France. 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 when the euro was introduced.

Beginning in 2007 or 2008 (depending on the country) 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. All common sides were designed by Luc Luycx. 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. The common (top) and national sides of the €2 coinThe 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).This practice is discouraged by the Commission, as is the habit of certain shops to refuse to accept high value euro notes.

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. The design for the euro banknotes have common designs on both sides. The design was created by the Austrian designer Robert Kalina.Notes are issued in €500, €200, €100, €50, €20, €10, €5. Each banknote has its own colour and is dedicated to an artistic period of European architecture. The front of the note features windows or gateways while the back has bridges.

While the designs are supposed to be devoid of any identifiable characteristics, the initial designs by Robert Kalina were of specific bridges, including the Rialto and the Pont de Neuilly, and were subsequently rendered more generic; the final designs still bear very close similarities to their specific prototypes; thus they are not truly generic.Some of the highest denominations such as the €500 are not issued in all countries, though they remain legal tender throughout the eurozone. Payments clearing, electronic funds transfer Capital within the EU may be transferred in any amount from one country to another. All intra-EU transfers in euro are considered as domestic payments and bear the corresponding domestic transfer costs.This includes all Member States of the EU, even those outside the eurozone providing the transactions are carried out in euro.Credit/debit card charging and ATM withdrawals within the eurozone are also charged as domestic, however paper-based payment orders, like cheques, have not been standardised so these are still domestic-based. The ECB has also set up a clearing system, TARGET, for large euro transactions. Currency sign A special euro currency sign (€) was designed after a public survey had narrowed the original ten proposals down to two.

The European Commission then chose the design created by the Belgian Alain Billiet. The official story of the design history of the euro sign is disputed by Arthur Eisenmenger, a former chief graphic designer for the EEC, who claims to have created it as a generic symbol of Europe. ~ Inspiration for the € symbol itself came from the Greek epsilon (€)- a reference to the cradle of European civilisation - and the first letter of the word Europe, crossed by two parallel lines to certify the stability of the euro. The European Commission also specified a euro logo with exact proportions and foreground/background color tones.While the Commission intended the logo to be a prescribed glyph shape, font designers made it clear that they intended to design their own variants instead.Typewriters lacking the euro sign can create it by typing a capital 'C', backspacing and over-striking it with the equal ('=') sign. Placement of the currency sign relative to the numeric amount varies from nation to nation, but for texts in English the symbol (and the ISO-standard "EUR") should precede the amount. Introduction of the euro The euro was established by the provisions in the 1992 Maastricht Treaty.

In order to participate in the currency, Member States are meant to meet strict criteria such as a budget deficit of less than three per cent of their GDP, a debt ratio of less than sixty per cent of GDP, low inflation, and interest rates close to the EU average. In the Maastricht Treaty, the United Kingdom and Denmark were granted exemptions per their request from moving to the stage of monetary union which would result in the introduction of the euro. Economists who helped create or contributed to the euro include Fred Arditti, Neil Dowling, Wim Duisenberg, Robert Mundell, Tommaso Padoa-Schioppa and Robert Tollison.[citation needed] (For macro-economic theory, see below.) The name euro was devised on 4 August 1995 by Germain Pirlot, a Belgian Esperantist and ex-teacher of French and history,and officially adopted in Madrid on 16 December 1995. Due to differences in national conventions for rounding and significant digits, all conversion between the national currencies had to be carried out using the process of triangulation via the euro.

The definitive values in euro of these subdivisions (which represent the exchange rates at which the currency entered the euro) are shown at right. The rates were determined by the Council of the European Union,based on a recommendation from the European Commission based on the market rates on 31 December 1998. They were set so that one European Currency Unit (ECU) would equal one euro. The European Currency Unit was an accounting unit used by the EU, based on the currencies of the Member States; it was not a currency in its own right. They could not be set earlier, because the ECU depended on the closing exchange rate of the non-euro currencies (principally the pound sterling) that day. The procedure used to fix the irrevocable conversion rate between the drachma and the euro was different, since the euro by then was already two years old. While the conversion rates for the initial eleven currencies were determined only hours before the euro was introduced, the conversion rate for the Greek drachma was fixed several months beforehand.

The currency was introduced in non-physical form (traveller's cheques, electronic transfers, banking, etc.) at midnight on 1 January 1999, when the national currencies of participating countries (the eurozone) ceased to exist independently. Their exchange rates were locked at fixed rates against each other, effectively making them mere non-decimal subdivisions of the euro. The euro thus became the successor to the European Currency Unit (ECU). The notes and coins for the old currencies, however, continued to be used as legal tender until new euro notes and coins were introduced on 1 January 2002. The changeover period during which the former currencies' notes and coins were exchanged for those of the euro lasted about two months, until 28 February 2002. The official date on which the national currencies ceased to be legal tender varied from Member State to Member State. The earliest date was in Germany where the mark officially ceased to be legal tender on 31 December 2001, though the exchange period lasted for two months more.

Even after the old currencies ceased to be legal tender, they continued to be accepted by national central banks for periods ranging from several years to forever (the latter in Austria, Germany, Ireland and Spain). The earliest coins to become non-convertible were the Portuguese escudos, which ceased to have monetary value after 31 December 2002, although banknotes remain exchangeable until 2022. DIRECT AND INDIRECT USAGE Direct usage The euro is the sole currency of 16 EU Member States: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. These countries comprise the "eurozone", some 326 million people in total. Estonia will join in 2011. With all but two of the remaining EU members obliged to join, together with future members of the EU, the enlargement of the eurozone is set to continue further.

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). Together this direct usage of the euro outside the EU affects over 3 million people. It is also gaining increasing international usage as a trading currency, in Cuba,North Korea and Syria.There are also various currencies pegged to the euro (see below). In 2009 Zimbabwe abandoned its local currency and used major currencies instead, including the euro and the United States dollar. Use as reserve currency Since its introduction, the euro has been the second most widely held international reserve currency after the U.S. dollar. The share of the euro as a reserve currency has increased from 17.9% in 1999 to 26.5% in 2008, at the expense of the U.S.

dollar (its share fell from 70.9% to 64.0% in the same time frame) and the Yen (it fell from 6.4% to 3.3%). The euro inherited and built on the status of the second most important reserve currency from the German mark. The euro remains underweight as a reserve currency in advanced economies while overweight in emerging and developing economies: according to the IMF the total of euros held as a reserve in the world at the end of 2008 was equal to USD 1.1 trillion, with a share of 22% of all currency reserves in advanced economies, but a total of 31% of all currency reserves in emerging and developing economies.

The possibility of the euro becoming the first international reserve currency is now widely debated among economists.Former Federal Reserve Chairman Alan Greenspan gave his opinion in September 2007 that it is "absolutely conceivable that the euro will replace the dollar as reserve currency, or will be traded as an equally important reserve currency."In contrast to Greenspan's 2007 assessment the euro's increase in the share of the worldwide currency reserve basket has slowed considerably since the year 2007 and since the beginning of the worldwide credit crunch related recession and sovereign debt crisis. Currencies pegged to the euro Outside the eurozone, a total of 23 countries and territories that do not belong to the EU have currencies that are directly pegged to the euro including 14 countries in mainland Africa (CFA franc and Moroccan dirham), two African island countries (Comorian franc and Cape Verdean escudo), three French Pacific territories (CFP franc) and another Balkan country, Bosnia and Herzegovina (Bosnia and Herzegovina convertible mark). On 28 July 2009, Sao Tome and Principe signed an agreement with Portugal which will eventually tie its currency to the euro.

With the exception of Bosnia (which pegged its currency against the German mark) and Cape Verde (formerly pegged to the Portuguese escudo) all of these non-EU countries had a currency peg to the French Franc before pegging their currencies 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, as the euro is seen as a stable currency, prevents runaway inflation and encourages foreign investment due to its stability. Within the EU several currencies have a peg to the euro, in most instances as a precondition to joining the eurozone. The Bulgarian Lev and the Estonian kroon were formerly pegged to the German mark, other EU member states have a direct peg due to ERM II: the Danish krone, the Lithuanian litas and the Latvian lats. In total, over 150 million people in Africa use a currency pegged to the euro, 25 million people outside the eurozone in Europe and another 500,000 people on Pacific islands.

ECONOMICS Optimal currency area In economics, an optimum currency area (or region) (OCA, or OCR) is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. There are two models, both proposed by Robert A. Mundell: the stationary expectations model and the international risk sharing model. Mundell himself advocates the international risk sharing model and thus concludes in favor of the euro.However, even before the creation of the single currency, there were concerns over diverging economies. Yet the chances of a state leaving the euro, or the chances that the whole zone would collapse, are extremely slim. Transaction costs and risks The most obvious benefit of adopting a single currency is to remove the cost of exchanging currency, theoretically allowing businesses and individuals to consummate previously unprofitable trades. For consumers, banks in the eurozone must charge the same for intra-member cross-border transactions as purely domestic transactions for electronic payments (e.g., credit cards, debit cards and cash machine withdrawals). The absence of distinct currencies also removes exchange rate risks. The risk of unanticipated exchange rate movement has always added an additional risk or uncertainty for companies or individuals that invest or trade outside their own currency zones.

Companies that hedge against this risk will no longer need to shoulder this additional cost. This is particularly important for countries whose currencies had traditionally fluctuated a great deal, particularly the Mediterranean nations. Financial markets on the continent are expected to be far more liquid and flexible than they were in the past. The reduction in cross-border transaction costs will allow larger banking firms to provide a wider array of banking services that can compete across and beyond the eurozone. Price parity Another effect of the common European currency is that differences in prices - in particular in price levels - should decrease because of the 'law of one price'. Differences in prices can trigger arbitrage, i.e. speculative trade in a commodity across borders purely to exploit the price differential. Therefore, prices on commonly traded goods are likely to converge, causing inflation in some regions and deflation in others during the transition. Some evidence of this has been observed in specific markets. Macroeconomic stability Low levels of inflation are the hallmark of stable and modern economies. Because a high level of inflation acts as a tax (seigniorage) and theoretically discourages investment, it is generally viewed as undesirable. In spite of the downside, many countries have been unable or unwilling to deal with serious inflationary pressures.

Some countries have successfully contained them by establishing largely independent central banks. One such bank was the Bundesbank in Germany; as the European Central Bank is modeled on the Bundesbank,it is independent of the pressures of national governments and has a mandate to keep inflationary pressures low.Member countries that join the bank commit to lower inflation, hoping to enjoy the macroeconomic stability associated with low levels of expected inflation.The ECB (unlike the Federal Reserve in the United States of America) does not have a second objective to sustain growth and employment. Many national and corporate bonds denominated in euro are significantly more liquid and have lower interest rates than was historically the case when denominated in legacy currencies.While increased liquidity may lower the nominal interest rate on the bond, denominating the bond in a currency with low levels of inflation arguably plays a much larger role. A credible commitment to low levels of inflation and a stable debt reduces the risk that the value of the debt will be eroded by higher levels of inflation or default in the future, allowing debt to be issued at a lower nominal interest rate.

Evidence on the effect of the introduction of the euro In conformity with the economic predictions, empirical studies have found that the introduction of the euro has had a positive impact on the movement of goods, financial assets, and people within the eurozone. In addition, countries which previously had weak currencies have benefited from lower interest rates and their firms now have easier access to capital. Trade The consensus from the studies of the effect of the introduction of the euro is that it has increased trade within the eurozone by 5% to 10%.On the lower bound, one study suggested an increase of 3%.A recent study estimates this effect to be between 9 and 14%. Investment Studies have found a positive effect of the introduction of the euro on investment. Physical investment seems to have increased by 5% in the eurozone due to the introduction.Regarding foreign direct investment, a study found that the intra-eurozone FDI stocks have increased by about 20% during the first four years of the EMU.Concerning the effect on corporate investment, there is evidence that the introduction of the euro has resulted in an increase in investment rates and that it has made it easier for firms to access financing in Europe.

The euro has most specifically stimulated investment in companies that come from countries that previously had weak currencies. A study found that the introduction of the euro accounts for 22% of the investment rate after 1998 in countries that previously had a weak currency.The effect is however less clear for firms coming from the strong currency countries; the introduction has not been beneficial for most of them. Inflation The introduction of the euro has led to extensive discussion about its possible effect on inflation. In the short term, there was a widespread impression in the population of the eurozone that the introduction of the euro had led to an increase in prices. Paradoxically, this impression has not been supported by general indices of inflation, showing no major effect of the introduction of the euro. A study of this paradox has found that it is due to an asymmetric effect of the introduction of the euro on prices: while it had no effect on most goods, it had an effect on cheap goods which have seen their price round up after the introduction of the euro.

The study found that consumers based their beliefs on inflation of those cheap goods which are frequently purchased.It has also been suggested that the jump in small prices may be due to the fact that prior to the introduction, retailers made fewer upward adjustments and waited for the introduction of the euro to do so. Exchange rate risk One of the advantages of the adoption of a common currency is the reduction of the risk associated with changes in currency exchange rates. It has been found that the introduction of the euro created "significant reductions in market risk exposures for non-financial firms both in and outside of Europe".These reductions in market risk "were concentrated in firms domiciled in the eurozone and in non-Euro firms with a high fraction of foreign sales or assets in Europe". These changes were however "statistically and economically small". Financial integration The introduction of the euro seems to have had a strong effect on European financial integration.

According to a study on this question, it has "significantly reshaped the European financial system, especially with respect to the securities markets.However, the real and policy barriers to integration in the retail and corporate banking sectors remain significant, even if the wholesale end of banking has been largely integrated."Specifically, the euro has significantly decreased the cost of trade in bonds, equity, and banking assets within the eurozone.On a global level, there is evidence that the introduction of the euro has led to an integration in terms of investment in bond portfolios, with eurozone countries lending and borrowing more between each other than with other countries. Effect on interest rates The introduction of the euro has decreased the interest rates of most members countries, in particular those with a weak currency. As a consequence the market value of firms from countries which previously had a weak currency has very significantly increased.The countries whose interest rates fell most as a result of the euro are Greece, Ireland, Portugal, Spain, and Italy. Price convergence The evidence on the convergence of prices in the eurozone with the introduction of the euro is mixed.

Several studies failed to find any evidence of convergence following the introduction of the euro after a phase of convergence in the early 1990s.Other studies have found evidence of price convergence,in particular for cars.A possible reason for the divergence between the different studies is that the processes of convergence may not have been linear, slowing down substantially between 2000 and 2003, and resurfacing after 2003 as suggested by a recent study (2009). Tourism A study has found that the introduction of the euro has had a positive effect on tourism flows within the EMU, with an increase of 6.5%. EXCHANGE RATES Flexible exchange rates The ECB targets interest rates rather than exchange rates and in general does not intervene on the foreign exchange rate markets, because of the implications of the Mundell-Fleming Model which suggest that a central bank cannot maintain interest rate and exchange rate targets simultaneously because increasing the money supply results in a depreciation of the currency. In the years following the Single European Act, the EU has liberalized its capital markets, and as the ECB has chosen monetary autonomy, the exchange rate regime of the euro is flexible, or floating.

Against other major currencies After the introduction of the euro, its exchange rate against other currencies fell heavily, especially against the U.S. dollar. From an introduction at US$1.18/€, the euro fell to a low of $0.8228/€ by 26 October 2000. After the appearance of the coins and notes on 1 January 2002 and the replacement of all national currencies, the euro began steadily appreciating, and regained parity with the U.S. dollar, on 15 July 2002. The euro has not fallen below parity with the U.S. dollar since December 2002 but has risen in value. On 23 May 2003, the euro surpassed its initial ($1.18) trading value for the first time. At the end of 2004, it reached $1.3668 (€0.7316/$) as the U.S. dollar fell against all major currencies. Against the U.S.

dollar, the euro temporarily weakened in 2005, falling to $1.18 (€0.85/$) in July 2005, and was stable throughout the third quarter of 2005. In November 2005 the euro again began to rise steadily against the U.S. dollar, hitting one record high after another. On 15 July 2008, the euro rose to an all-time high of $1.5990 (€0.6254/$). In a reversal, in August 2008 the euro began to drop against the U.S. dollar.

In just two weeks the euro fell from its peak to $1.48 and by late October it reached a two and a half year low below $1.25 before moving back above $1.50 by November 2009.On 29 December 2008, the pound sterling fell to an all-time low of £0.97855 (€1.0219/£) against the euro, although its value recovered somewhat in 2009.In early 2010, concerns over the solvency of Greece caused a drop in the exchange rate against the dollar. The euro - European Commission European Commission Communicating on the euro The euro The euro is the single currency shared by 19 of the European Union's Member States, which together make up the euro area. The introduction of the euro in 1999 was a major step in European integration. It has also been one of its major successes: more than 337.5 million EU citizens in 19 countries now use it as their currency and enjoy its benefits. The euro is not the currency of all EU Member States.

Two countries (Denmark and the United Kingdom) have ‘opt-out’ clauses in the Treaty exempting them from participation, while the remainder (several of the more recently acceded EU members plus Sweden) have yet to meet the conditions for adopting the single currency. See the timeline below to have a glimpse of the historical evolution of the euro area since 1999. Click here for a detailed list of countries that use the euro . The euro and Economic and Monetary Union (EMU) All EU Member States form part of EMU, which can be described as an advanced stage of economic integration based on a single market. It involves close co-ordination of economic and fiscal policies and, for those countries fulfilling certain conditions, a single monetary policy and a single currency – the euro. The process of economic and monetary integration in the EU parallels the history of the Union itself. When the EU was founded in 1957, the Member States concentrated on building a 'common market'. However, over time it became clear that closer economic and monetary co-operation was necessary for the internal market to develop and flourish further.

The goal of achieving the EMU, including a single currency, was not enshrined until the 1992 Maastricht Treaty (Treaty on European Union), which set out the ground rules for its introduction. These state what the objectives of EMU are, who is responsible for what, and what conditions Member States must meet in order to adopt the euro. These conditions are known as the 'convergence criteria' (or 'Maastricht criteria'). These criteria include low and stable inflation, exchange rate stability and sound public finances. Who manages it? The monetary policy of the eurozone is the responsibility of the European Central Bank (ECB), which was created for that purpose, and the national central banks of the euro area countries. Together they compose the Eurosystem. Fiscal and structural policies remain in the hands of individual national authorities. However, they must coordinate these policies in order to attain the common objectives of stability, growth and employment. A major coordination structure is the Stability and Growth pact , which contains agreed rules on fiscal discipline. The task of supervising financial institutions in the euro area has been entrusted to the European Central Bank and national supervisors.

Working closely together within an integrated system, they check that banks comply with the EU banking rules in order to tackle problems early on. Why do we need it? The framework under which the euro is managed underpins its stability, contributes to low inflation and encourages sound public finances; A single currency is a logical complement to the single market and contributes to making it more efficient – increasing price transparency, eliminating currency exchange costs, facilitating international trade and giving the EU a more powerful voice in the world; The size and strength of the euro area also better protect it from external economic shocks, such as unexpected oil price rises or turbulence in the currency markets; It makes travelling easier within the EU; It acts as a tangible symbol of European identity. European Recovery Against the background of the current debt crisis important measures to improve the economic governance in the EU and the euro area in particular have been taken. EU Member States have strengthened the Stability and Growth Pact, introduced a new mechanism to prevent or correct macroeconomic imbalances and are increasingly coordinating structural policies. These are crucial steps to strengthen the "E" - the economic leg - of the EMU and to ensure the success of the euro in the long run.

ExchangeRate.com - Currency Information Icelandic Krona | Post | View The króna (plural krónur) (sign: kr; code: ISK) is the currency of Iceland. The króna is technically subdivided into 100 aurar (singular eyrir), but in practice this subdivision is no longer used. The word króna, meaning "crown", is related to that of other Nordic currencies (such as the Danish krone, Swedish krona and Norwegian krone) and to the Latin word corona ("crown"). The name "Icelandic crown" is sometimes used, for example in the financial markets. First króna, 1874–1981 The Danish krone was introduced to Iceland in 1874, replacing the earlier Danish currency, the rigsdaler. In 1885, Iceland began issuing its own banknotes. The Icelandic króna separated from the Danish krone after the dissolution of the Scandinavian Monetary Union at the start of World War I and Icelandic autonomy from Denmark in 1918. The first coins were issued in 1922.

Coins Iceland's first coins were 10 and 25 eyrir pieces introduced in 1922. These were followed in 1925 by denominations 1 and 2 króna pieces and in 1926 by 1, 2 and 5 eyrir pieces. In 1946, the coins' designs were altered to remove the royal monogram (CXR), following Icelandic independence from Denmark in 1944, when Denmark (but not Iceland) was occupied by Nazi Germany. Starting in 1967, new coins were introduced due to a considerable fall in the value of the króna. 10 króna coins were introduced in that year, followed by 50 eyrir and 5 króna pieces in 1969 and 50 króna pieces in 1970. Banknotes The first notes issued in 1885 by the Landssjóð Íslands were in denominations of 5, 10 and 50 krónur.

In 1904, the Bank of Iceland (Íslands Banki) took over note production and introduced 100 króna notes. In 1921, the Ríkissjóð Íslands began issuing paper money, with notes for 1, 5, 10 and 50 krónur. In 1929, another bank, the Landsbanki Íslands took over issuance of denominations of 5 krónur and above, with the Rikissjod Islands continuing to issue 1 króna notes until 1947. The Landsbanki Íslands introduced 500 króna notes in 1935, followed by 25 and 1000 króna notes in 1957. In 1961, the Seðlabanki Íslands became the central bank of Iceland and started issuing paper money, in denominations of 10, 25, 100, 500, 1000 and 5000 krónur.

Second króna, 1981–present In 1981, the Icelandic króna was revalued, with 100 old krónur (ISJ) being worth 1 new króna (ISK). Technically, the króna is still composed of 100 aurar, although, in practice, coins less than one króna have not circulated for many years. In September 2002, Davíð Oddsson, the Icelandic Prime Minister at the time, signed two regulations decreeing that all monetary amounts on invoices and financial claims should be stated and paid in whole krónur only and that coins with a value of less than one króna should be withdrawn from circulation. Aurar are still used for pricing certain shares on the Iceland Stock Exchange. Coins In 1981, coins were introduced in denominations of 5, 10 and 50 aurar, 1 and 5 krónur. These were followed by 10 króna pieces in 1984, 50 krónur in 1987 and 100 krónur in 1995.

As of 1 October 2003, Icelandic banks no longer accept the 5, 10 and 50 aurar coins. Banknotes Icelandic banknotes are printed with the dates from which the legal basis of the currency derives. In 1981, notes were issued in denominations of 10, 50, 100 and 500 krónur on the law of 29 March 1961. 1000 krónur notes were introduced in 1984, followed by 5000 krónur notes in 1986 with the same law. 100, 500, and 1000 krónur were reissued in 1994 on the law of 5 May 1986. In the following year, a new denomination 2000 krónur was issued for the very first time. The 2000 króna note is subtly different from the other notes. For example, the underprint pattern extends all the way upward and downward, while the other denominations had white margins on every side.

The Arabic numeral 2000 is printed in multi color on 3 of the 4 instances. And the numeral 2000 on the lower left corner of reverse is vertical. The "shadow" of the numeral is printed with SÍ in microprint. The 22 May 2001 series saw more changes than mere date update. The underprint and microprint change of the 2000 króna note were incorporated. The 1000 and 5000 krónur notes also received metallic foils next to the portrait. Notes of 100 krónur or less no longer circulate, as they have been withdrawn by the central bank. As of 2006, the vast majority of banknotes in circulation are of the 500, 1000, and 5000 denominations (these generally being the only notes dispensed in ATMs, for example). 2000 króna notes exist but are unusual and are at times referred to as "tourist money" by the local population. Their use never became widespread. Currency issues Iceland is not currently a member of the European Union and does not use the euro.

However, an application for membership is in progress. The Icelandic currency is a low-volume world currency, strongly managed by its central bank, with a high degree of volatility not only against the US and Canadian dollars, but also against the currencies of the other Nordic countries (Swedish krona, Norwegian krone, Danish krone and euro). For example, during the first half of 2006, the Icelandic króna ranged between 50 and 80 per US$. Prior to the currency's collapse in October 2008, the króna was considered overvalued; in July 2008, a Big Mac cost the equivalent of nearly six U.S. dollars, versus $3.57 in the USA. At most shops electronic payment is accepted. Other currencies are very rarely accepted in Iceland. A notable exception is Keflavík International Airport (which has many transfer passengers), where the US dollar, euro and some other currencies are accepted by all merchants. Certain stores in downtown Reykjavík accept some foreign currencies. The overall level of technological sophistication is noteworthy in Iceland.

Iceland has, for example, among the highest per capita computer usage in the world (far higher than the UK or USA).[citation needed] The saturation of technology in Iceland has had ramifications in their monetary system; a very large percentage of all transactions in Iceland take place through electronic forms of payment, such as debit and credit cards and online bank transfers. It is also worth noting that the value of banknotes is relatively small, e.g. the largest denomination banknote is the 5000 króna note, while a mid-range dinner for two in Iceland, without drinks or dessert, can easily exceed 5000 krónur (ca. EUR 28 in June 2009). This effect may accelerate the Icelandic move towards a semi-cashless economy. 2008 financial crisis In October 2008, the effects of the 2007/08 global financial crisis brought about a collapse of the Icelandic banking sector. The value of the Icelandic króna plummeted, and on 7 October 2008 the Icelandic Central Bank attempted to peg it at 131 against the euro. This peg was abandoned the next day.

The króna later fell to 340 against the euro before trade in the currency was suspended (by comparison, the rate at the start of 2008 was about 90 krónur to the euro). After a period of tentative, very low-volume international trading in the króna, activity had been expected to pick up again throughout November 2008, albeit still with low liquidity, as Iceland secured an IMF loan. However as of January 2009 the krona was still not being traded regularly, with the ECB reference rate being set only intermittently, the last time on December 3, 2008 at 290 ISK per euro. The Icelandic krona similarly fell in value against the US dollar, from c. 50 to 80 per dollar to about 110-115 per dollar; by mid-November 2008 it had continued its slide to c. 135 to the dollar. As of April 2, 2009, the value hovered around 119 per US dollar. Previously high costs for foreign tourists thereby dropped, which Iceland's tourism industry hopes to exploit.

Iceland and the euro Theoretically the adoption of the euro could have several advantages. Adopting a stronger currency may help Iceland to "avoid the turbulence surrounding speculations in international financial markets". In addition, Icelandic economists listed several arguments in favour of the euro before the crisis. "In terms of growth potentials and welfare, the euro could be expected to bring lower long-term interest rates [...]. This would of course increase capital investment and labour productivity. The euro might lower consumer prices by facilitating a comparison with other euro countries." Because of the volatility between the euro and the króna, former Foreign Minister Valgerður Sverrisdóttir considered the idea that Iceland might dollarize itself into the eurozone without joining the European Union. The opinion regarding the euro is mixed among Icelanders. An opinion poll on the matter of Iceland joining the European Union released on September 11, 2007, by Capacent Gallup showed that 53% of respondents were in favour of adopting the euro, 37% opposed and 10% undecided.

Another poll produced for the Icelandic newspaper Fréttablaðið and released on 30 September 2007 showed 56% opposed to euro adoption and 44% in favour. In January 2008, a poll by the Icelandic Chamber of Commence put support for Iceland to abandon the króna for another currency at 63%. Additionally, a number of companies in Iceland such as Ossur, have started to pay their employees in euros or US dollars, mainly due the high inflation and high volatility. The 2008/2009 financial crisis prompted further calls for Iceland to join the eurozone. In January 2009, one senior Icelandic official stated that due to the crisis "the krona is dead. We need a new currency. The only serious option is the euro." In March 2009, a report by Iceland's Minister for Foreign Affairs, Össur Skarphédinsson, considered three options: retaining the krona, adopting the euro without joining the EU and adopting the euro through EU membership. The report recommended the third option.

An economic study of the impact of the adoption of the euro by Iceland found that "the Icelandic krona acts as a barrier to international trade, and that by joining the EU and adopting the euro, Icelandic trade could increase by 60%". In July 2009, the Alþingi narrowly voted to apply for EU membership. Euro Currency |authorSTREAM Euro currency Does not support media & animations Automatically changes to Flash or non-Flash embed The presentation is successfully added In Your Favorites . Views: This Presentation is Public Favorites: 3 Euro currency Presented by: Waisuddin sadry MBA, 3 rd sem Introduction : The euro (sign: €; code: EUR) is the official currency of the euro zone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union The euro zone consists of : Austria Belgium Cyprus Estonia Finland France Germany Greece Ireland Italy Luxembourg Malta The Netherlands Portugal Slovakia Slovenia Spain Introduction iNTRODUCTION: iNTRODUCTION The euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar.

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, Euro coins and banknotes entered circulation on 1 January 2002 The currency is also used in a further five European countries : Montenegro Andorra Monaco San Marino Vatican City It is consequently used daily by some 332 million Europeans PowerPoint Presentation: Andorra Austria Belgium Cyprus Finland France Germany Greece Ireland Italy Kosovo Luxembourg Countries with this currency PowerPoint Presentation: The central bank in Europe is called the European Central Bank (ECB), and as of 2011, 17 EU member states have adopted the Euro. It is the second-most traded currency on the forex market, as many institutions and individuals trade the EUR. Other names for the Euro are Teuro (German), Eumeln (German), Quid (Irish English), Leru (Spanish), Neuro (Italian), and Ege (Finnish).

On January 1, 1999, eleven of the countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherland, Portugal, and Spain) In the European Economic and Monetary Union (EMU) decided to give up their own currencies and adopt the Euro (EUR) currency- The Vatican City also participated in that changeover. Greece followed suit on January 1, 2001, Slovenia on January 1 2007, Malta and Cyprus on January 1, 2008, and Slovakia on January 1, 2009.

History: Currency Facts : Currency Facts EUR Stats EUR Profile Name: Euro Symbol: € Cent: cent Minor Unit: 1/100 = Cent Central Bank Rate: 1.5 Top EUR Conversion: EUR/USD Top EUR Chart: EUR/USD Chart Inflation: 2.5% Nicknames: Ege (Finnish), Eumeln (German), Leru (Spanish), Neuro (Italian), Quid (Irish English), Teuro (German) Coins: Freq Used: €1, €2, 5cent, 10cent, 20cent, 50cent Rarely Used: 1cent, 2cent Banknotes: Freq Used: €5, €10, €20, €50, €100 Rarely Used: €200, €500 Central Bank: European Central Bank Website: PowerPoint Presentation: Characteristics: Coins and banknotes The euro is divided into 100 cents (sometimes referred to as euro cents, especially when distinguishing them from other currencies) 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 when the euro was introduced. All euro coins have a common side, and a national side chosen by the issuing bank PowerPoint Presentation: 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. PowerPoint Presentation: 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). The design for the euro banknotes has common designs on both sides. The design was created by the Austrian designer Robert Kalina . Notes are issued in €500, €200, €100, €50, €20, €10, €5. Each banknote has its own color and is dedicated to an artistic period of European architecture.

The front of the note features windows or gateways while the back has bridges. PowerPoint Presentation: Administartion : Th e euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Euro system (composed of the central banks of the eurozone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Euro system participates in the printing, minting and distribution of notes and coins in all member states, and the operation of the eurozone payment systems. The ECB in Frankfurt, Germany, is in charge of the eurozone's monetary policy. PowerPoint Presentation: Payments clearing, electronic funds transfer Capital within the EU may be transferred in any amount from one country to another. All intra-EU transfers in euro are considered as domestic payments and bear the corresponding domestic transfer costs. This includes all member states of the EU, even those outside the eurozone providing the transactions are carried out in euro. Credit/debit card charging and ATM withdrawals within the eurozone are also charged as domestic, however paper-based payment orders, like cheques , have not been standardised so these are still domestic-based. The ECB has also set up a clearing system, TARGET, for large euro transactions.

PowerPoint Presentation: Direct and indirect usage Direct usage The euro is the sole currency of 17 EU member states: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany,Greece , Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. These countries comprise the "eurozone", some 326 million people in total. With all but two of the remaining EU members obliged to join, together with future members of the EU, the enlargement of the eurozone is set to continue further. Outside the EU, the euro is also the sole currency of Montenegro and Kosovo and several European micro states (Andorra, Monaco, San Marino and the 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 ). Together this direct usage of the euro outside the EU affects over 3 million people. It is also gaining increasing international usage as a trading currency, in Cuba, North Korea and Syria. There are also various currencies pegged to the euro .

In 2009 Zimbabwe abandoned its local currency and used major currencies instead, including the euro and the United States dollar. PowerPoint Presentation: Use as reserve currency Since its introduction, the euro has been the second most widely held international reserve currency after the U.S. dollar. The share of the euro as a reserve currency has increased from 17.9% in 1999 to 26.5% in 2008, at the expense of the U.S. dollar (its share fell from 70.9% to 64.0% in the same timeframe) and the Yen (it fell from 6.4% to 3.3%). The euro inherited and built on the status of the second most important reserve currency from the Deutsche Mark.

The euro remains underweight as a reserve currency in advanced economies while overweight in emerging and developing economies : according to the International Monetary Fund the total of euro held as a reserve in the world at the end of 2008 was equal to USD 1.1 trillion or €850 billion, with a share of 22% of all currency reserves in advanced economies, but a total of 31% of all currency reserves in emerging and developing economies. PowerPoint Presentation: Economics Optimal currency area : In economics, an optimum currency area ( or region) is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. However, even before the creation of the single currency, there were concerns over diverging economies. 2) Transaction costs and risks : The most obvious benefit of adopting a single currency is to remove the cost of exchanging currency, theoretically allowing businesses and individuals to consummate previously unprofitable trades. For consumers, banks in the eurozone must charge the same for intra-member cross-border transactions as purely domestic transactions for electronic payments (e.g., credit cards, debit cards and cash machine withdrawals). The absence of distinct currencies also removes exchange rate risks.

PowerPoint Presentation: Economics The risk of unanticipated exchange rate movement has always added an additional risk or uncertainty for companies or individuals that invest or trade outside their own currency zones. Companies that hedge against this risk will no longer need to shoulder this additional cost. This is particularly important for countries whose currencies had traditionally fluctuated a great deal, particularly the Mediterranean nations. 3) Price parity : Another effect of the common European currency is that differences in prices – in particular in price levels – should decrease because of the 'law of one price'. Differences in prices can trigger arbitrage, i.e. speculative trade in a commodity across borders purely to exploit the price differential. Therefore, prices on commonly traded goods are likely to converge, causing inflation in some regions and deflation in others during the transition. Some evidence of this has been observed in specific eurozone markets. PowerPoint Presentation: Economics 4) Investment : Physical investment seems to have increased by 5% in the eurozone due to the introduction. Regarding foreign direct investment, a study found that the intra-eurozone FDI stocks have increased by about 20% during the first four years of the EMU.

Concerning the effect on corporate investment, there is evidence that the introduction of the euro has resulted in an increase in investment rates and that it has made it easier for firms to access financing in Europe. The euro has most specifically stimulated investment in companies that come from countries that previously had weak currencies. A study found that the introduction of the euro accounts for 22% of the investment rate after 1998 in countries that previously had a weak currency. PowerPoint Presentation: Economics 5) Inflation : The introduction of the euro has led to extensive discussion about its possible effect on inflation. In the short term, there was a widespread impression in the population of the eurozone that the introduction of the euro had led to an increase in prices, but this impression was not confirmed by general indices of inflation and other studies. It has also been suggested that the jump in small prices may be because prior to the introduction, retailers made fewer upward adjustments and waited for the introduction of the euro to do so. 6) Exchange rate risk : One of the advantages of the adoption of a common currency is the reduction of the risk associated with changes in currency exchange rates.

It has been found that the introduction of the euro created "significant reductions in market risk exposures for nonfinancial firms both in and outside of Europe“. These reductions in market risk "were concentrated in firms domiciled in the eurozone and in non-Euro firms with a high fraction of foreign sales or assets in Europe". PowerPoint Presentation: Economics 7) Financial integration: The introduction of the euro seems to have had a strong effect on European financial integration. According to a study on this question, it has "significantly reshaped the European financial system, especially with respect to the securities markets .However, the real and policy barriers to integration in the retail and corporate banking sectors remain significant, even if the wholesale end of banking has been largely integrated.“ Specifically, the euro has significantly decreased the cost of trade in bonds, equity, and banking assets within the eurozone. On a global level, there is evidence that the introduction of the euro has led to an integration in terms of investment in bond portfolios, with eurozone countries lending and borrowing more between each other than with other countries. PowerPoint Presentation: Economics 9) Effect on interest rates : The introduction of the euro has decreased the interest rates of most members countries, in particular those with a weak currency.

As a consequence the market value of firms from countries which previously had a weak currency has very significantly increased. The countries whose interest rates fell most as a result of the euro are Greece, Ireland, Portugal, Spain, and Italy.[61] The effect of such low interest rates made it easier for banks within the countries in which interest rates fell and the countries themselves to borrow significant amounts (above the 3% of GDP budget deficit imposed on the eurozone initially) and increase their public deficit and levels of privately held consumer debt. 10) Tourism A study suggests that the introduction of the euro has had a positive effect on the amount of tourist travel within the EMU, with an increase of 6.5%. View More Presentations The Euro: Advantages and Disadvantages Of A Single Currency | Currency Solutions The Euro: Advantages and Disadvantages Of A Single Currency September 17th, 2014 Photo by: news Every national currency around the globe is subject to identical market laws and its value changes according to the same factors that influence all other currencies. Within the Eurozone, all countries share the same currency - the euro, and are less affected by changes in the euro exchange rate.

There are many advantages of the euro adoption by the countries in the Eurozone, despite that disadvantages also exist, and the most well known are the following: obliteration of the existing exchange rate fluctuations between a number of currencies and reduction of transaction costs (no other currency is necessary when conducting business or travelling in the Eurozone). The single European currency also stimulates trade activities and free movement of capital, goods and people but these effects should be subject to a profound academic research. Previously, the national economies of the European Union member states sometimes suffered from fluctuations of the local currencies within a common market. The euro exchange rate does not offer shelter from currency fluctuations in general but provides predictability and unifies the means of exchange in all countries in the Eurozone. Following the adoption of the euro, 12 countries in the EU witnessed their national currency disappear with more new member states entering the Eurozone gradually and other waiting at the door. Thus, all current members of the Eurozone take advantage of the single currency but they share the same disadvantages as well. When the U.S. Federal Reserve releases data showing increasing unemployment rate, falling number of new mortgages and growing number of businesses going bankrupt the most immediate consequence will be a falling exchange rate of the U.S. dollar.

The same applies to the single European currency, but in addition to the data released by the European Central Bank, Forex traders around the globe take decisions whether to buy or not to buy euro depending on data about the national economies of the countries participating in the Eurozone. Hence, negative signals reported by the French or German economy could result in depreciation of the euro exchange rate as a whole despite that the economies of all other Eurozone member states are running smoothly. From the average customers’ point of view, the single euro exchange rate is a good thing, though. There is no need to exchange your money into a new currency every time you cross a border within the Eurozone. The euro facilitates also the currency transfers within and outside the EU and reduces the costs of such transfers. As a rule, the risks of a currency collapse cannot be eliminated but the safety provided by the euro is good enough to reduce such risks to a minimum and to maintain largely predictable euro exchange rate. Share The Details of Finland Currency By Terri Mapes Updated September 09, 2016. Unlike its Nordic neighbors, Finland never formed part of uniformed Scandinavian Monetary Union .

Instead, Finland used its own currency of Markka since 1860, never resorting to Kronur as the main currency. The Markka officially ceased to be legal tender in February 2002, when Finland introduced the Euro as its new currency. At the point of conversion, the Markka had a fixed rate of 6 Markka equal to 1 Euro. Finland is the only Nordic country to use the Euro. In January 1999, the ball was set in motion towards a unified Europe with the introduction of the Euro as the official currency in eleven countries. In spite of resistance from its neighbors, Finland embraced the idea of converting to the Euro. Finland joined the Third Phase of the Economic and Monetary Union in in May 1998 before adopting the new currency. However, members of this Union didn’t start using the Euro as hard currency until 2002, when Euro banknotes and coins were introduced for the first time. continue reading below our video Long-Haul Flight Survival Tips At the same time, the Markka was completely withdrawn from circulation in Finland. So far, the Finnish economy has performed very well after joining the EU.

The country received much need financial alms, aiding as a buffer from the Russian financial crisis. Today the Euro is one of the most powerful currencies, being used by 23 European countries in total. It is denominated as € (or EUR). Notes are valued in 5, 10, 20, 50, 100, 200 and 500 Euro, while coins are valued at 5, 10, and 20, 50 cents and 1 and 2 Euro. 1 and 2 cent coins might be used in other countries, but is not applicable to Finland. When visiting Finland, amounts exceeding EUR 10 000 need to be declared if you are traveling to or from a country outside the European Union. There are no restrictions on all major types of debit and credit cards, so they can be used freely. When exchanging currency, consider using only banks and ATM’s for the best rate. In general, local banks are open between 9 am and 4.15 pm on weekdays.

From the Bank of Finland: "The Bank of Finland acts as Finland's central bank, national monetary authority, and member of the European System of central banks and the Eurosystem. The Eurosystem covers the European Central Bank and the euro area central banks. It administers the world's second largest currency, the euro. There are over 300 million people living in the euro area and from the beginning of 2011 the area covers 17 countries. Therefore, the Bank of Finland's strategies are related to both domestic and Eurosystem objectives. " Spanish Currency - Spanish Money History: The Peseta | don Quijote Read the Spanish version The euro was introduced as money in Spain in 2002. The majority of the European Union members adopted this new currency to make traveling between countries easier, since the currency for Spain is the same in most EU countries. The euro is the official currency of 16 (of 27) member states in the EU: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Spain and Estonia (due to join in 2011).

The euro consists of 7 bank notes with values of: 500€, 200€, 100€, 50€, 20€, 10€ and 5€, and 8 coins with values of: 2€, 1€, 0.50€, 0.20€, 0.10€, 0.05€, 0.02€ and 0.01€. On the denomination side of the Spanish currency, the image is the same for all European countries, but the image on the face side of the coins vary according to which country the coin came from. Spanish Currency History Spain’s currency history prior to the euro consisted of the Spanish Real, the Spanish Escudo, and the Spanish Peseta. Most of the changes in Spanish money occurred due to conceptual shifts, when certain denominations of an old Spanish currency began to be mentioned with words that would later be used to describe what would eventually become the new currency in Spain .

The Spanish real, meaning Royal, was the Spanish currency for several centuries from the mid-14th century until 1864, when the escudo replaced the real in the Spanish economy. The real was introduced by King Pedro I of Castile as a standardized coin with a value of 3 maravedíes (Iberian gold and silver coins). Eight reales was equivalent to one silver peso, or Spanish dollar, which would be introduced as Spanish money the same year. The Spanish dollar was used in American and Asia and Spanish coinage became popular during this period in international trade and commerce. The Spanish escudo referred to two different types of Spanish currency denominations: silver and gold. The first Spanish escudo was a gold coin and was introduced in 1566 which continued to be issued until 1833. The Silver escudo was used from 1864-1869 until it was replaced by the new Spanish currency called the peseta. Each escudo represented a certain value of reales, the previous currency of Spain. Before the euro became the main currency of Spain, the money in Spain was called pesetas.

Pesetas were in use from 1869 until the implementation of the euro in 2002. The word peseta comes from the word peceta, a diminutive of the Catalan word peça, meaning “a small piece.” By the 15th century the word referred to a silver coin and by the Middle Ages the word was used to describe the value of two reales (previous Spanish currency). In an effort to unite the currency in Spain, a decree was issued in October of 1868 when Spain joined the Latin Monetary Union that stablished the peseta as the national Spanish currency with the intention of strengthening the economy, business and promoting a stable financial system. Spanish Economy When Spain was accepted into the EU, it generated increased foreign investment and market liberalization in the Spanish economy. Spain was the principal beneficiary of the EU’s “harmonization fund” which provided support to the poorer EU nations to reduced economic disparities. A number of EU-funded projects during this time propelled the economy in Spain, including: the construction of airports, highways, and high-speed rail lines. After a small economical downturn in the mid-1990s, the Spanish economy entered into a period of growth.

The Spanish economy is one of the top 15 economies of the world and top 5 European economies. Spain’s economy had above average GDP growth for nearly 15 years, but began to slow in late 2007. By the second quarter of 2008, the economy in Spain had entered into recession (along with most of the world). The economic situation in Spain resulted in a decline in the construction sector, an oversupply of housing, falling consumer spending and less exports. In 2009, Spain had the highest unemployment rate in the EU. The most important agricultural products in the Spanish economy include: grains, vegetables, olives, wine, grapes, sugar beets, citrus, beef, pork, poultry, dairy products, and fish. The most important industries for the economy of Spain are: apparel and footwear, food and beverages, metals and metal manufacturing, chemicals, pharmaceuticals, shipbuilding, automobiles, machine tools, tourism, clay and refractory Contact us

Question: Prior to adopting the euro, what was the name of the currency shared by Germany and Finland?
Answer: Mark