The story of the euro (der Euro)

The euro in Austria, Germany and Europe

On 1 January 2002, twelve European Union countries, including Austria and Germany, put a brand new currency into circulation: the euro. Average Germans were not so sure they really wanted to give up their strong Deutsche Mark for this untested new money. The Austrians were also rather fond of their Schilling. But it was auf Wiedersehen to the old and in with the new.

The European Central Bank (ECB) is the euro zone’s equivalent of the Fed, regulating Europe’s common currency. The new ECB complex towers above Frankfurt am Main. PHOTO: Hyde Flippo

In reality the true birth of the euro took place in 1999. Before it went into circulation as a cash currency, the euro (der Euro, dare OY-row, in German) spent three years of its life as so-called Buchgeld (money on account) used for cashless transaction by banks and stock markets in the new “eurozone.” At the dawn of 1999, the German mark, the Austrian schilling and other currencies were each set at a fixed, irrevocable rate against the euro. After that, the value of a Deutsche Mark or an Österreichischer Schilling depended on its relationship to the euro. Despite the fact that it was not yet in circulation, the euro became the legal “coin of the realm” in the then eleven countries of the zone. (See our current Eurozone member list below.)

In an effort to strengthen the European economy and eliminate intra-European trade barriers, the Council of Europe (Europäischer Rat) had met in Madrid in December 1995. The old ECU unit (created in 1979) was renamed the “euro,” a term that seemed to work well in all of the languages in the EU — and the new name was free of any lexical connection to existing national currencies.

Over the three-year period of 1999 through 2001, the citizens of euro-countries were supposed to get used to the idea of the new money’s arrival, while government and business prepared to put it into circulation. Technically, the German mark and other European currencies were just tandem partners to the euro, the true legal tender in all of the euro zone nations.

On 1 January 1999, its first official day of “cashless” trading in Sydney, Australia (the international date line and all that), the euro (EUR) debuted at 1.1747 US dollars (USD), a positive sign to those who saw the euro as serious competition for the dominant world currency, the dollar. But the euro exchange rate later plunged below a dollar, reaching a record low of 82.30 cents on 25 October 2000. Supporters claimed the euro would gain strength once it finally got into the hands of consumers as spendable cash, and by mid-2004 it had indeed climbed to around $1.20 USD, also reflecting weakness in the dollar. By the end of 2007 the currency had reached new record highs against the dollar: one euro cost over $1.44 USD. During 2008 the euro peaked at around $1.60 USD before the mortgage crisis in the United States threw a monkey wrench into the world economy. By March 2009, the euro had fallen back almost to 2004 levels, in the $1.27 range, but by September 2009, the euro was again climbing close to $1.50 USD.

Chart: The Euro’s Value in USD
As of late June 2022, the euro was worth $1.06 USD ($1.0583). Below is a chart showing the average euro/US dollar exchange rate for January of each year from 2002 to 2013. The chart begins with 2002 because that was the year when the euro went into circulation as a cash currency. The record high for the euro against the dollar was $1.6040 on 15 July 2008. The record low ($0.823) occurred in July 2000, when the euro had not yet gone into circulation. From the chart one can see that the euro has been fairly stable, mostly staying in a range of about $1.25-1.35 USD. Despite all the economic turmoil in the intervening years, the euro exchange rate in January 2013 ($1.33) was very close to the rate in January 2005 ($1.31 USD). Cont’d. below. >

What do you know about the euro? PHOTO: Hyde Flippo

Crises and uncertain times always affect the value of the money in your pocket. When the euro is trading high against the dollar, it’s not a good time to visit Europe. The last time one US dollar equaled one euro was in 2002, the first year the new European currency was in circulation. Even the strong Swiss franc (CHF) follows that rule. It was at dollar parity in March 2015, dropping from previous highs versus the euro and the dollar. By early March 2022 the CHF was back up to about $1.07 USD, close to the euro’s value, which was around $1.09 USD at that time.

The Greek Crisis
In early 2010, it was discovered that Greece had been cooking its books and was in serious financial trouble, forcing other eurozone countries to deal with a possible national bankruptcy. Several other EU members (Italy, Portugal, Spain) had troubled economies suffering from the worldwide recession. By mid-February 2010 the euro had dropped to an exchange rate of around $1.36 USD, from about $1.50 a year earlier. But by early 2022, those values seemed to be sky high.

In January 2007 Slovenia became the first country to join die Eurozone since the euro’s 2002 debut, raising the number of countries using the euro from 12 to 13. On the first day of 2008 two more EU countries began using the euro: Cyprus and Malta, making the total 15. Slovakia made it 16 in 2009. (In the meantime, the EU had also expanded from 15 to 27 members.)

A 50-euro banknote. The first euro banknote series in 2002 was designed by the Austrian graphic designer Robert Kalina. The updated look of the newer “Europa” Series 2 (2017), seen here, is the work of the Berlin designer Reinhold Gerstetter. PHOTO: ECB

Estonia, Latvia, Lithuania
Some people were surprised in 2013 when the former eastern block country of Latvia was approved to become the 18th euro nation beginning on the first day of January 2014. But Latvia wanted to cement its EU membership and move away from its former Russian ties by also becoming part of the eurozone. Back on 1 January 2011, Estonia had become the 17th euro country for similar reasons. After a delay of several years, a third Baltic state was approved to join the euro in January 2015. Lithuania thus became the 19th eurozone member. (See the full Eurozone member list below.)

As the Cyprus banking crisis in early 2013 and the 2014-2015 Greek debacle reminded us, the euro crisis remains largely unsolved. Although the euro and European unity are inexorably linked, the economic uncertainty in Europe may continue for years to come. But the Russian war in Ukraine that began on 24 February 2022 (as an escalation of the Russo-Ukrainian War that started in 2014) has helped create a higher sense of unity in the EU and Europe.

The Eurozone Countries

The following alphabetical list shows the current 20 member nations in the eurozone – with the date of admission in parentheses. Croatia become the 20th member on 1 January 2023.
Austria (founding member, 1 January 1999)
Belgium (founding member, 1 January 1999)
Croatia (joined on 1 January 2023)
Cyprus (joined on 1 January 2008)
Estonia (joined on 1 January 2011)
Finland (founding member, 1 January 1999)
France (founding member, 1 January 1999)
Germany (founding member, 1 January 1999)
Greece (joined on 1 January 2001)
Ireland (founding member, 1 January 1999)
Italy (founding member, 1 January 1999)
Latvia (joined on 1 January 2014)
Lithuania (joined on 1 January 2015)
Luxembourg (founding member, 1 January 1999)
Malta (joined on 1 January 2008)
Netherlands (founding member, 1 January 1999)
Portugal (founding member, 1 January 1999)
Slovakia (joined on 1 January 2009)
Slovenia (joined on 1 January 2007)
Spain (founding member, 1 January 1999)
Also see The Euro Timeline (1946 to the present).
Note: Four non-EU states in Europe have signed formal agreements with the EU to use the euro and issue their own euro coins: Andorra, Monaco, San Marino, and Vatican City. They do not have a seat in the European Central Bank (ECB) or the Euro Group. Two more nations (Kosovo and Montenegro) have chosen to unilaterally use the euro as their sole currency, without any official agreement. They are not considered part of the eurozone by the ECB, and the ECB and the EU oppose such “euroization” without any formal agreement.

Next | Euro Timeline

Related Pages
AT THE GERMAN WAY

• The Euro Timeline (1946 to the present) – The ups and downs of Europe’s common currency
• Euro Quiz 1 – How much do you know about Europe’s common currency? Try this self-scoring quiz.
• Banks and Money in Germany
• Top German Banks with European bank rankings
• International Money Transfers

ON THE WEB

• The euro – EU Website – All about Europe’s currency, which went into circulation in January 2002.
• CurrencyFair – International money transfers at the best rate
• The history of the euro – From the European Commission site
• The euro area – EU Website – From the European Commission site
• MasterCard – ATM Finder – Did you know there are over 2,000 ATMs in Austria? Click on “ATM Finder” to find where they are, in Germany or any other other country.
• Visa – ATM Finder – Click on “ATM Locator” on the Visa home page to locate ATMs anywhere in the world.

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