It began with just 12 European countries. The European Currency Unit, as it was then called in 1979, was a “first attempt to account” for Europe’s entire economy. The ECU strived to manage price fluctuations among European nations since the early ‘60s. Being so closely mapped together, it’s difficult for Germany, Spain or France to thrive without doing trade with one another. Trade is the most widely used indicator for measuring a currency’s value.
The euro was officially launched as a medium of exchange in 2002. Today, the currency represents the EU as a global presence in trade. The currency’s strength and stability stands as a result of 19 countries working through an integrated payment system and shared monetary policy. Member European nations also have the right to leverage the euro as their reserve. A reserve currency is helpful when debt and imbalances hit a country’s economy.
When these countries have financial difficulties, a reserve can be used to bail them out.
Pushing the Boundaries and Setting New Heights
The creation of the euro brought about the largest monetary shift in global history. Preparing for Europe’s monetary changeover required 40 million banknotes and 7.8 million coins to be put into circulation. The currency is now the central medium of exchange, facilitating trade and business across borders for over 340 million Europeans.
Managing Exchange and Handling Uncertainty
Behind the massive facade of the euro, which is the second-largest reserve currency on the planet, is the EMU also known as the Economic and Monetary Union. The Economic and Monetary Union is the strategic foundation behind EU economies. It establishes fiscal policies in order to coordinate the currency’s value within Europe and abroad. The EMU is operated by the European Central Bank (ECB). Its central objective is to maintain price stability for the countries that use the euro as their currency.
The EMU’s judicious power, however, exists without any one party controlling it. The EMU relies on a collective that aids the EU in policymaking. The Economic and Monetary Union relies on the help of the Member States, the European Commission, the European Council, the European Parliament, and the European Central Bank. Through these beneficiaries, the euro sustains its value against the dollar via money supply, trade, and changing interest rates.
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