The European Union / Currency use by European Union
European Union
According to the European Union’s official website, the union’s purpose is to promote peace, establish a unified economic and monetary system, promote inclusion and combat discrimination, break down barriers to trade and borders, encourage technological and scientific developments, champion environmental protection, and, atong others, promote goals like a competitive global market and social progress.
So, put simply, the European Union is a coalition of 28 (soon to be 27 following Britain’s bow out from the union in 2019) European countries, designed to tear down trade, economic and social barriers and promote flourishing in these areas. Established in 1993, the European Union’s headquarters are currently located in Brussels, Belgium. In the post-World War II world, the European Union has sought to bolster the individual and collective economic and social well being of the countries involved, as well as establish a cohesive global marketplace that promotes trade and other social values.
Still, the European Union functions by a three-pronged governing system including a council, a parliament, and a commission, and uses a common currency called the euro.
European Union History
Despite not being officially formed until 1993, the European Union’s foundations actually reach further back to 1957, when the European Economic Community was established. The EEC was formed out of a previous group called the European Coal and Steel Community – which had its own start in 1951.
Among other things, the EEC was designed to help break down trade barriers between countries in Europe, protect from private trade agreements that could diminish competition, and establish common agricultural and trade agreements and standards. The countries that comprised the EEC included Ireland, the United Kingdom, Denmark, the Netherlands, Belgium, Luxembourg, France, West Germany (and later East), Italy, Portugal, Spain and Greece.
However, it wasn’t until 1993 that the EEC morphed into the European Union following the new Maastricht Treaty (also known as the Treaty on European Union).
Additionally, the Treaty of Lisbon, enacted in 2009, gave the European Union more broad powers that included being authorized to sign international treaties, increase border patrol, and other security and enforcement provisions.
On Feb. 7, 1992, the European Union was officially formed via the Maastricht Treaty. The treaty was comprised of three principle components. The European Communities, security and foreign policy, and cohesive domestic affairs and justice standards.
The treaty broadened the newfounded EU’s scope, which now includes both economic and social issues – like education, public health, technological development, and environmental protection, to name a few. And, perhaps most significantly, the treaty put into motion a common monetary policy united under a common currency – the euro.
Additionally, the treaty established economic standards, including debt and budget requirements in relation to each country’s Gross Domestic Product (GDP), as well as inflation levels. Despite some countries failing to meet some of the standards detailed within the treaty (like Italy and Belgium), they were still inducted into the monetary union.
Still, the European Union is not the same thing as eurozone – which created in 2005, is simply the collection of all the countries that use the euro. As an obvious example, Britain doesn’t use the euro but is still (until 2019) part of the European Union.
But despite the common pledge of EU members to eventually switch over to using euros, only 19 of the current 28 use the euro, as of 2018.
What Currency Does the European Union Use?
Unsurprisingly, the European Union primarily uses the euro as currency, which is reportedly the second most-used currency in the world, under the U.S. dollar. Once established, the euro has replaced many of Europe’s leading
currencies, including French and Italian currencies like the franc and lira, to name a few. In fact, according to the EU’s website, more than 340 million EU citizens in 19 countries use the euro as their currency.
However, not all countries have adopted the euro – with Britain famously holding onto the pound.
The euro, despite being so commonly held, has a fluctuating value – which exchange traders daily determine in comparison to the U.S. dollar as a standard.
