The launch of the euro on 1 January 1999 and the introduction of euro banknotes and coins in 2002 marked the culmination of a long journey that had begun decades before, driven by a simple and compelling logic: it is easier to trade in a common market if you use a common currency.
The euro has come a long way from the early discussions on an Economic and Monetary Union in the late 1960s to being the second most important currency in the world today.
- 1951European Coal and Steel Community (ECSC)
Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany agree to create a common market under supranational regulation for coal and steel. The idea behind this community was to withdraw the resources that had been vital for the world wars – coal and steel – from national sovereignty in order to preserve lasting peace. This milestone represents the beginning of economic integration and the very first step towards the creation of a single market. Building on thissuccess, the six countries later agree to integrate other sectors of their economies with the aim of removing trade barriers and forming a common market. The European Economic Community (EEC) and the European Atomic Energy Community (EURATOM) are formed in 1957.
- 1970Werner Report
Europe's leaders set up a high-level group led by Pierre Werner, the Luxembourg Prime Minister at the time, to report on how an Economic and Monetary Union (EMU) could be achieved within 10 years. The resulting report is issued in October 1970.
- 1979European Monetary System
The project for an Economic and Monetary Union moves ahead with the creation of the European Monetary System (EMS) and the European Currency Unit (ECU), a virtual currency used as a unit of account. Within the European Monetary System, EU countries agree to keep their currency within a determined fluctuation band. This is the start of the exchange rate mechanism.
- 1989Delors Committee: ‘one market, one money’
The success of the European Monetary System provides the impetus for further discussions between EU countries on how to achieve an Economic and Monetary Union (EMU). The ‘Delors Committee’ is set up to examine specific, gradual steps towards a single currency. The resulting report proposes concrete steps to achieve an EMU.
- 1990Free movement of capital
First step of the Economic and Monetary Union (EMU): all restrictions on the movement of capital between EU countries are abolished.
- 1992Maastricht Treaty
In 1992, European leaders sign the new Treaty on European Union, in Maastricht, the Netherlands. The treaty includes the provisions needed to implement the Economic and Monetary Union (EMU). Leaders agree on the criteria that each Member State must meet to adopt the single currency.
- 1994European Monetary Institute
Second step of the Economic and Monetary Union (EMU): the European Monetary Institute (EMI) is set up in Frankfurt. The EMI carried out all the preparatory work for the ECB to assume its responsibility for monetary policy in the euro area. Monetary policies are increasingly coordinated and economic convergence is strengthened.
- 1998European Central Bank
On 1 June 1998, the European Central Bank (ECB) becomes operational in Frankfurt, replacing the EMI. It is established as the core of the Eurosystem and the European System of Central Banks (ESCB), together with all national central banks of the EU member states.
- 1999The euro is born
Third step of the Economic and Monetary Union (EMU): after a decade of preparations, on 1 January 1999, exchange rates are irrevocably fixed between the 11 participating EU countries. Authority over monetary policy is transferred from national central banks to the European Central Bank. The euro is launched as an accounting currency on financial markets and used for electronic payments. It becomes the official currency of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. In 2001, Greece becomes the 12th country to adopt the euro.
- 2002The euro in our pockets
After three years of using the euro as an ‘accounting currency’ alongside national currencies, the 12 countries swap their old notes and coins for euros. It is the largest currency changeover in history.
- 2007Slovenia joins the euro area
- 2008Cyprus joins the euro area
- 2008Malta joins the euro area
- 2008The global financial crisis and the EU response
In 2008, the global economic and financial crisis begins and spreads to the euro area. Some countries such as Cyprus, Greece, Ireland, Portugal, and Spain are particularly affected. The EU institutions take swift action to provide financial assistance to these countries and to strengthen the governance and resilience of the Economic and Monetary Union (EMU). In the following years, a number of major initiatives are launched, including the European Stability Mechanism (ESM), the European Semester, and the Banking Union.
- 2009Slovakia joins the euro area
- 2011Estonia joins the euro area
- 2012Action to preserve the euro
In July 2012, in order to restore market confidence and to support euro area countries under pressure, European Central Bank President Mario Draghi announces: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” The statement is followed by a number of measures designed to instil confidence and ensure that the financial markets work properly. This decisive response by the ECB, together with liquidity for banks, low interest rates and future measures like the quantitative easing programme, supports economic growth across the euro area and contributes to a return to the inflation target. The actions taken by the European Union and its Member States put Europe back on a path of recovery.
- 2014Latvia joins the euro area
- 2014A unified system to supervise banks in Europe
Supervision of banks in countries using the euro is brought under the Single Supervisory Mechanism, led by the European Central Bank. The purpose of European banking supervision is to make sure that banks in Europe are safe.
- 2015Lithuania joins the euro area
- 2015 and onwardsDeepening the Economic and Monetary Union
In June 2015, the presidents of five European institutions - the European Commission, the European Council, the European Central Bank, the European Parliament and the Eurogroup - publish a vision for deepening the Economic and Monetary Union, known as the ‘Five Presidents’ Report’. These ideas are developed further in several reflection papers in 2017. Implementation begins with the EMU deepening package proposed by the Commission in December 2017, which includes further steps to increase the unity, efficiency and democratic accountability of the EMU and to complete the Banking Union.
In 2015, the Juncker Commission also puts forward the Investment Plan for Europe to reinvigorate investment and boost growth and jobs. A plan to create a true single market for capital in the EU, the Capital Markets Union, is also launched.
- 2020EU comprehensive response to the coronavirus pandemic
In 2020, following the outbreak of the coronavirus (COVID-19) pandemic, EU institutions and Member States acted swiftly and decisively to counter the crisis and promote a sustainable and inclusive recovery. While temporary, some of the measures launched have been unprecedented in scope and size, and a true expression of EU solidarity:
- NextGenerationEU: a more than €800 billion temporary recovery instrument allowing the Commission to raise funds to help repair the economic and social damage done by the pandemic. Its centrepiece is the Recovery and Resilience Facility (RRF), with €723.8 billion in loans and grants available to support reforms and investments in EU countries. The aim is to mitigate the economic and social damage of the crisis while making European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.
- SURE: the Commission also launched its instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), through which it can provide financial assistance up to €100 billion in loans to affected Member States to address sudden increases in public expenditure for the preservation of employment, protecting jobs and workers.
- PEPP: in March 2020, the ECB launched its €1.85 trillion temporary asset purchase programme, the Pandemic Emergency Purchase Programme (PEPP), to mitigate the impact of the coronavirus pandemic on the euro area economy and to support all European citizens.