Launch of euro notes and coins in the eurozone, 1 January 2002

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Publication Date 04/01/2002
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For more than 300 million European citizens midnight on 1 January 2002 signified more than the start of a New Year, it also marked the start of their new currency - the euro - as legal tender. Although the euro was officially launched on 1 January 1999 it has only existed as an electronic currency for the last three years, being used on foreign exchange markets and for transactions between banks and larger companies. Finally, as it entered into circulation and into the pockets and wallets of eurozone citizens it became a reality for millions of Europeans.

The launch of euro notes and coins was celebrated with events throughout the eurozone as the European Union officials hailed the event a dawn of a new era for Europe. Romano Prodi, the president of the European Commission, said,

Today is a very special day, a great day for Europe. Only a few years ago the euro was a dream, but now we have made it a reality.

The president of the European Central Bank echoed Prodi's sentiments, saying

On 1 January at zero hour, the introduction of euro bank notes and coins marked not only the completion of economic and monetary union but one of the major, if not the major step forward in the history of European integration. ...1 January 2002 will appear in the history books in all our countries and beyond as the start of a new era in Europe.

Background

The arrival of the single currency in the pockets of Europeans represents the completion of the third and final stage of Economic and Monetary Union as set out by the Treaty on European Union. The first stage began on 1 July 1990 - before the treaty - and included the abolition of remaining capital controls between Member States. This was followed by stage two which began on 1 January 1994 and established the European Monetary Institute (EMI) which was given the task of preparing for the third stage of EMU. This stage began on 1 January 1999 when the European System of Central Banks, comprised of national central banks and the European Central Bank took over the responsibility for monetary policy.

More information on the the European Union's Economic and Monetary policy can be found in the following sources within European Sources Online:

  • Topic Guide: Economic and Monetary Union
  • Topic Guide: European Central Bank

The European Commission SCADplus site also provides a good overview.

It was decided at an Ecofin Council meeting on 2 May 1998 that 11 Member States would adopt the currency, on the basis they had met the necessary criteria. These countries are collectively referred to as the eurozone or euro area and comprise Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Greece joined these countries in 1 January 2001 after it was deemed to have met the necessary convergence criteria (See European Sources Online: In Focus: Greece submits formal application to participate in monetary union, 9 March 2000).

When the third stage of EMU began on 1 January 1999 the exchange rates of the participating currencies were irrevocably set based on the following conversion rates:

1 Euro (€) is worth:
13.7603 Austrian schillings 340.750 Greek drachma
40.3399 Belgian francs 0.787564 Irish punts
2.20371 Dutch guilders 1936.27 Italian lira
5.94573 Finnish markka 40.3399 Luxembourg francs
6.55957 French francs 200.482 Portuguese escudos
0.95583 German marks 166.386 Spanish pesetas

Of the fifteen member states of the European Union three decided to opt out of economic and monetary union, namely Denmark, the United Kingdom and Sweden. These three countries are sometimes referred to as the 'outs'.

Denmark was the first of the three 'outs' to hold a referendum on whether to join the single currency. In a referendum on 28 September 2000, voters in Denmark rejected joining the euro by a majority of 6.2%. A reported turnout of 88% registered 53.1% against joining the Euro, with 46.9% in favour (More information can be seen in the European Sources Online: In Focus: Danes reject the euro).

The date for a UK referendum on the Euro has not yet been set, although the Chancellor Gordon Brown reaffirmed the government's intention to hold one in a speech at the Mansion House in June 2001 intention to hold one in October 2001:

'The people have the final say in a referendum. And that commitment to a referendum - if the economic tests are met - is a promise we made in our election manifesto only a few weeks ago.'

Overall the government's stance is that British membership of a successful single currency would offer the nation obvious benefits - in terms of trade, transparency, costs and currency stability as well as creating the conditions for higher and more productive investment and greater trade and business in Europe. However, the government stands firm that the economic conditions must be right and these will be assessed on the basis of five Economic Tests:

  • sustainable convergence between Britain and the economies of a single currency;
  • whether there is sufficient flexibility to cope with economic change;
  • the effect on investment
  • the impact on our financial services industry
  • whether it is good for employment

More information on the UK government's stance on the single currency can be found on the HM treasury website.

In August 2001 the Swedish Goran Persson announced that the country might join the European currency in 2005 after a referendum if the introduction of the notes and coins went well. He said the Swedish government would begin evaluating the conditions of entry early in its next term of office. Sweden's next general election will be in early September next year.

The Euro: Symbol and Images

The name 'euro' was chosen by the European Heads of State or Government at the European Council meeting in Madrid in December 1995. The graphic symbol for the euro looks like an E with two clearly marked, horizontal parallel lines across it. It was inspired by the Greek letter epsilon, in reference to the cradle of European civilisation and to the first letter of the word 'Europe'. The parallel lines represent the stability of the euro.

The design of euro notes was announced at the European Council meeting in Dublin, December 1996. Windows and gateways on the front of the banknotes are used to symbolise the European spirit of openness and co-operation while the 12 stars of the European Union represent the dynamism and harmony between European nations. The reverse of each banknote features a bridge which symbolise the close co-operation and communication between Europe and the rest of the world.

Euro Notes

Euro Coins

The eight denominations of coins vary in size, colour and thickness according to their values, which are 1, 2, 5, 10, 20 and 50 cent or EUR 1 and EUR 2. One euro is divided into 100 cent.

The European Council meeting in Amsterdam, June 1997 took the final decision on the design of the euro coins after Luc Luycx of the Royal Belgian Mint won a European wide competition to design the euro coins. One of three designs common to all 12 euro area countries showing different maps of Europe surrounded by the 12 stars of the European Union is featured on one side of all coins.

Euro Coins

Individual designs relating to the respective Member State, surrounded by 12 stars are pictured on the reverse side of euro coins although all euro coins can be used anywhere in the euro area, regardless of their national sides. For example, a Financial Times journalist was able to obtain Finnish euros on 1 January 2002 travel across Europe and spend the same euros with their Finnish symbols in a seaside town in Greece.

To view the country-specific coins you may click on the following links:

Austria France Ireland Netherlands
Belgium Germany Italy Portugal
Finland Greece Luxembourg Spain

To help those with impaired sight recognise different values milled edges have been added to the coins and sophisticated bi-metal technology has been incorporated into the EUR 1 and EUR 2 coins which, together with lettering around the edge of the EUR 2 coin, prevents counterfeiting. However, the coins have been criticised because of their high nickel content. Dermatologists at Graz university hospital in Austria have shown that euro coins can cause contact dermatitis in those people sensitive to nickel. This means that those regularly handling coins such as cashiers may well find themselves developing the dermatitis. The coins could have been made out of a nickel free alternative known as Nordic gold.

Impact of the euro on businesses and consumers

In the countdown to the euro changeover there has been much speculation about the impact that the largest currency changeover ever made - requiring the exchange of 15 billion notes and 50 billion coins - will have on businesses and consumers throughout the eurozone.

In the days following the launch there has been a general feeling that these fears have not been realised with the switch to euro coins and notes going relatively smoothly in most countries of the eurozone. There have been some technical hitches such as all cash machines in Austria breaking down for a brief period and in Italy pensioners were forced to queue for hours for their pensions. But most Europeans have got their hands on the euros they wanted and have been able to spend them too.

However, the real impact on businesses is likely to show in the coming weeks and months. Pedro Solbes, European Commissioner for Economic and Financial Affairs has suggested that 90% of all transactions should be taking place in euros within the next two weeks but some busineses remain unprepared. Studies by the European Commission suggest that small and medium sized enterprises are particularly unprepared for the euro which could cause problems in areas such as the payments of staff, and purchases of goods and services. . Furthermore, the mere cost of the actual changeover - public awareness campaigns, changing payment systems - is likely to have a huge effect on businesses. Economists at BNP Paribas estimate that the total costs of the changeover could reach around €160-180 billion, almost twice the size of the Irish economy.

Effects on consumer behaviour have also been predicted with people cutting down on their spending as they grow accustomed to a new currency. Paddy Miller, a professor of organisational behaviour at the ISE business school in Barcelona, has suggested that,

the impact will be like visiting a foreign country. It takes a while before you become comfortable with an unfamiliar currency, and until you know the true value of what you are buying.

Furthermore, Europe wide surveys have shown that consumers fear price rises, with retailers taking the opportunity to round prices up and this could prove the ultimate factor in depressing consumer demand. Results so far paint a confusing picture of whether prices are set to rise with the euro. While Wim Duisenberg claimed that he had been able to buy a Big Mac and milkshake for exactly the same price as he had the previous week, the British Sun newspaper claimed that their paper cost £1.26 when converted from euros compared to its normal selling price of 30p. However, European Commissioner for Economic and Financial Affairs, Pedro Solbes, said that dual pricing had been found to be accurate in 95% of cases.

Lower consumer demand could be exacerbated by a drop in retail turnover as retailers in shops have to use two tills to deal with both their national currency and euros. Euro commerce has estimated that just an extra 20 seconds added to each transacxtion would lead to a drop in retail turnover by 10%.

The euro on the Global Markets

Despite the fears on the continental front about how consumers and busineses would be affected, the smooth changeover to the euro has helped to boost the euro's value on the foreign exchanges. On the 2 January 2002 when the euro faced its first real consumer test it rose strongly against the dollar, pound and yen hitting a two-week high of $0.9066. This fell slightly on 4 January 2002 to $0.9003. leaving the sterling weak against the euro at 62.23p

The political aspect of the euro

The arrival of the euro in European citizens' pockets has almost as much political significance as it does economic. As Romano Prodi said of the euro on 1 January 2002,

it is already a symbol of European unity and will be more so in the future.

He claimed that the euro as 'a little piece of Europe in our hands' would lead to an increase in European identity and in the long term, a euro would be,

synonymous with the EU in the same way that people associate the dollar with the USA.

EU leaders are certainly hoping that the euro will help to increase the sense of being European but national citizens are not totally convinced. The latest Flash Eurobarometer published in November 2001 showed that only 20% of those European citizens surveyed fully agreed that the euro would help them to feel more European than now compared to 22% who thought it definitely would not. Ultimately, there are the national symbols on one side of every coin to remind people of the different nationalities and while the country-specific coins will eventually be mingled throughout the eurozone it is likely to take be many years before the euro really fosters a European identity.

Future challenges

Aside from creating a European identity the euro faces many more real challenges in the future.

First and foremost, it needs to become a domestic currency as respected as the Deutschmark and an international currency to rival the dollar but there are still a number of factors which could block the path to success. For examples, controversial issues such as the co-ordination of economic policy, the role of the European Central bank, tax harmonisation and the use of the euro as a reserve currency still need to be resolved.

The future enlargement of the EU and the adoption of the single currency in Central and Eastern Europe will also pose major challenges to the euro as it replaces more unstable currencies in this area.

The euro may have passed its first test of arriving in the pockets and wallets of euroxzone citizens but it has still to prove itself in many ways.

Further information within European Sources Online:

European Sources Online: Topic Guide:

  • Economic and Monetary Union
  • The European Central Bank

European Sources Online: In Focus:

11.03.00: Greece submits formal application to participate in monetary union
01.10.00: Danes reject the euro

European Sources Online: European Voice

10.12.98: Celebrations muted as monetary union starts
18.06.98: Euro countdown: e-day minus 197: paving the way for a smooth changeover
04.02.99: Just take a deep breath and say 'euro'
11.05.00: More to euro's fall than meets the eye
01.06.00: Euro - 11 builds an 'economic government' for the single currency area
06.01.01: Euro zone prepares for day when single currency will become a physical reality
11.01.01: Despite the barrage of information about the big currency switchover, millions are still in the dark
26.04.01: Little to smile about in build-up to big euro changeover
08.11.01: Special Report: The Euro: Cometh the hour, cometh the money. Are you sure, Wim?
08.11.01: Special Report: The Euro. Businesses strive for seamless transition
08.11.01: Special Report: The Euro. Avoiding the Pitfalls on Euro-day
29.11.01: Today the euro, tomorrow the 'intor'

European Sources Online: Financial Times

10.12.98: Governments plan rapid switch to euro
13.11.01: Brussels more confident of successful switch to euro
15.11.01: Solbes rules out financial aid for SMEs ahead of euro changeover
24.11.01: The euro challenge
30.11.01: Only 27% totally against the euro, says poll
06.12.01: Economists speculate on euro psychology
08.12.01: France urges UK to join the euro
11.12.01: Euro coins: small change brings big problems
27.12.01: Currency pioneers get ready for euro's big day [FT.com]
28.12.01: Euro 'will soon be a parallel currency' [FT.com]
29.12.01: Visitors face difficulties getting hold of currency [FT.com]
29.12.01: Growth in eurozone money supply accelerates [FT.com]
31.12.01: 300m Europeans welcome euro notes and coins [FT.com]
31.12.01: Euro steady ahead of euro notes and coins launch [FT.com]
31.12.01: Prodi calls for increased economic co-operation [FT.com]
31.12.01: Duisenberg pays tribute to euro [FT.com]
31.12.01: Political currency [FT.com]
31.12.01: Schroeder makes plea for Germans to accept euro [FT.com]
01.02.02: Euro faces first real test on Wednesday [FT.com]
01.02.02: Currency has hitches in store [FT.com]
01.02.02: Finland hails arrival of the euro [FT.com]
01.02.02: French ATMs yield euro disappointment [FT.com]
01.02.02: Hain hints at early assessment of UK euro entry [FT.com]
02.02.02: Crunch comes as most shops reopen after holiday [FT.com]
02.02.02: Euros readily accepted in Denmark [FT.com]
02.02.02: Small change, giant leap [FT.com]
02.02.02: French Ministers warn over Britain's EU role [FT.com]
02.02.02: China sees a counterweight to the dollar [FT.com]
02.02.02: Polish banks braced for rush to conversion [FT.com]
02.02.02: They seem to be real - they look like ours somehow [FT.com]
02.02.02: A catalyst for further change [FT.com]
02.02.02: Portuguese businesses condemn dual circulation [FT.com]
02.02.02: Hard road finding a home for my euro [FT.com]
02.02.02: Prodi hails 'symbol of European unity' [FT.com]
02.02.02: Europe takes euro in stride on first business day [FT.com]
02.02.02: Euro climbs after launch of notes and coins [FT.com]
02.01.02: Shopkeepers need more low value notes [FT.com]
02.01.02: Blair will 'seize chance' for referendum on euro [FT.com]
03.01.02: Euro starts food price war [FT.com]
03.01.02: Rome trio's thumbs down to euphoria [FT.com]
03.02.02: Smooth launch gives single currency a boost [FT.com]
03.02.02: Euro gains on sterling on changeover [FT.com]
03.01.02: Delays add to stress for Italians [FT.com]
03.01.02: Euro changeover judged a success in early days [FT.com]
03.01.02: Europe's biggest logistical operation in peacetime goes smoothly [FT.com]
03.01.02: Demands for euros exceeds expectations [FT.com]
03.01.02: ECB to focus on euro changeover success [FT.com]
05.01.02: Eurozone gives thumbs-up to new currency (FT.com)
05.01.02: The first week of the euro (editorial) (FT.com)

Further information can be seen in these external links:
(long-term access cannot be guaranteed)

EU Organisations

European Commission

DG Press and Communication

Press Releases
24.09.01: Euro-99: Eurobarometer shows steady but slow progress [IP/01/1305]
09.10.01: Euro-83: Commission report on euro changeover preparations shows glass is only half full and calls for fast implementation of 40 best practices [IP/01/1384]
12.11.01: Euro - 50 : eurochangeover preparations - getting there on time [IP/01/1563]
15.11.01: The euro and SMEs: preparations well in hand - steady increase in use of the euro [IP/01/1589]
31.12.01: Euro-1: all set to go [IP/01/1915]
02.01.02: The euro: Europe takes changeover in its stride [IP/02/1]
03.01.02: Shops switch to the euro [IP/02/5]
Memos
18.12.01: Penalties in case of non-respect of the conversion rules [MEMO/01/444]
09.12.01: The euro Changeover Information Network (CIN) [MEMO/01/447]
Speeches
24.09.01: EURO - 99 : the last hurdles to a smooth changeover [Pedro Solbes: SPEECH/01/405]
03.01.02: Introductory remarks at a press conference at the European Central Bank [Pedro Solbes: SPEECH/02/1]
Public Opinion and the Euro
Euro Tracking Survey - December 2001 [French only]
Euro tracking Survey - Trends March 2000 to May 2001

DG Economic and Financial Affairs

DG Health and Consumer Protection

European Central Bank

International Organisations

International Monetary Fund

Organisation for Economic Co-operation and Development

National Organisations

Austria

Belgium

Finland

Germany

Greece

Ireland

Italy

Luxembourg

The Netherlands

Spain

Portugal

United Kingdom

Non-governmental organisations

Association for the Monetary Union of Europe

Euro Information Service

EuroPortal: Your Launchpad to Euro Currency Links

Consumers in Europe Group

News Organisations

BBC Online

Europe's Single Currency
The Euro Look
History of the Euro
The UK and the Euro
05.06.00: Euro finance ministers to discuss differences
29.09.00: What future for Denmark?
29.09.00: Europe plays down Danish 'no' vote
29.09.00: Q&A: A test for the euro
06.11.00: European Central Bank props up euro
08.11.00: Voters harden against euro
09.11.00: ECB's fourth euro intervention
18.12.00: The euro: still in the doldrums
01.01.01: Greece joins eurozone
03.01.01: Euro continues rise
12.02.01: Euro cash tough to launch
31.05.01: Euro and the consumer
31.05.01: Business and the euro
05.06.01: Euro still wobbly
10.08.01: Sweden 'will join euro in 2005'
30.08.01: The politics of the euro
30.08.01: Countdown to euro cash
10.09.01: Eurozone faces US pitfalls
30.10.01: Why Eastern Europe loves the euro
23.11.01: Q&A: Is the UK ready for the euro?
11.12.01: Russia clings to the dollar
18.12.01: The (UK) economics of the euro
19.12.01: The UK's euro battle
27.12.01: British shops urged to accept euro
27.12.01: Euro fuels price rise fears
29.12.01: Mini-states gear up for euro
30.12.01: Africa gears up for euro launch
31.12.01: Launching the euro
31.12.01: UK euro decision 'on its way'
31.12.01: Europe readies for historic euro
01.01.02: The euro is launched
01.01.02: Euro's 'massive impact' on Britons
01.01.02: UK 'would lose power' outside euro
01.01.02: Euro becomes a reality
02.01.02: Euro rivals square up for battle
02.01.02: Germany's euro frustrations and worries
02.01.02: The costs and benefits of the euro
02.01.02: Q&A: Euro cash launch
02.01.02: The euro falters at first post
02.01.02: NI businesses to accept euros
02.01.02: Euro cash switch hailed a success
03.01.02: Euro cash launch a 'tremendous success'
03.01.02: Fake euro note found
03.01.02: Italy's euro woes
03.01.02: Europe soars against major currencies
05.01.02: Euro sweeps up old currencies
06.01.02: Italian Minister quits in euro row

Further and subsequent information on the subject of this In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'single currency', 'euro', 'economic and monetary union' etc in the keyword field.

Helen Bower
Compiled: 4 January 2002

Overview of one of the most momentous events in the history of European integration - the introduction of a single European currency.

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