Due to the considerable number of countries in Europe using their own monetary units, problems arose in trading between countries as well as discrepancies in exchange rates between the various forms of money. After several consecutive years of confusion, the European Monetary Union concluded that it was time to unify European currency. The currency they concluded to be the most beneficial for solving the currency problem was the Euro.
The Euro is the new single currency for eleven European countries participating in the monetary union. On January 1, 1999, the Euro became the official currency of eleven countries including Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Portugal, and Spain (Peterson 4-5). The Euro is creating an entirely new playing field for global commerce. When this trans-European currency in completely phased in by 2002, it will transform Europe into one of the largest economic blocs in the world.
The exchange rates between the eleven participating countries' currencies have been established, but the Euro will not be used for cash transactions until .
January 1, 2002. On that date individual countries' currencies will cease to be used and the Euro will be the legal tender for all monetary transactions (Keegan 2). Denominations for the new Euro currency will be issued in amounts of 1,2,5,10,50 for coins and 5,10,20,50,100,and 500 for bank notes (Peterson). .
For the countries that have decided to participate in the use of the Euro, its use becomes compulsory after the local currencies have been withdrawn. Up until this point there have been no obligations to use the Euro nor is there a ban on using it. .
Many people believe that the Euro may challenge the supremacy of the United States dollar. These people feel this way because a large part of the industry and trade will take place under the currency of the Euro. With this in mind, the Euro has many potential benefits.