Banque de France Bulletin no. 242: Article 2 The euro: in our pockets for 20 years

By Gardiennet Pascale, Giner Julien, De Pastor Raymond, De Tarlé Hugo

Thematic: Means of payment and currency in circulation

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In 2022, the euro is celebrating the 20th anniversary of its launch in the form of banknotes and coins. The transition to a common currency was a milestone in European integration. The euro banknotes and coins have changed dramatically over the past two decades. The spectacular growth in the number of banknotes in circulation has made it the world’s second largest currency in circulation, and the demand for euro banknotes continues unabated. In France alone, the stock of banknotes in circulation has increased almost sixfold since 2002. The uses of this currency have also evolved. Its role as a payment instrument has diminished, mainly replaced by bank card payments. Euro banknotes are increasingly being held for other reasons, such as a store of value or demand from outside the euro area, reflecting the confidence in the single currency.

On 1 January 2002, 12 EU countries gave up their national currencies and adopted a single currency: the euro. The 7 denominations of the euro replaced the 75 denominations previously used by 313 million Europeans. This constituted the largest currency changeover in modern history, but was also an unprecedented logistical challenge that proved to be a great success. Euro banknotes and coins are one of the most tangible symbols of European integration for the 343 million inhabitants of the euro area, which now comprises 19 countries. More than three quarters (79%) of Europeans are now in favour of the single currency. Despite the digitalisation of payment instruments, euro cash is still very popular in France, Europe and worldwide. With almost 29 billion banknotes in circulation totalling EUR 1,600 billion, the euro is the second most widely used currency in the world after the US dollar.

1 The changeover to the euro: a historic challenge

From the idea of the single currency to the creation of euro banknotes

In 1970, the Werner Report laid the foundations for the practical transition to Economic and Monetary Union (EMU) with a common currency at its heart. However, it was not until 1992, with the Maastricht Treaty, that the EMU process was set in motion with the “eventual adoption” of a single currency, the name of which, “euro”, was decided by the European Council in 1995. The adoption of the euro then took place in two stages:

• First, as of 1 January 1999, the euro became the legal tender for the first 11 members of the euro area. Greece joined this group in 2001 and thus participated in the changeover on 1 January 2002 like the other eleven member countries. In accounting terms, national currencies officially became subdivisions of the euro at a fixed exchange rate and based on the double accounting principle. In France, 1 euro is worth 6.55957 French francs.

• Second, as of 1 January 2002, the cash euro was made available to the general public in seven banknote denominations and eight coin denominations.

From a practical point of view, the adoption of the euro greatly simplified trade within the euro area and considerably reduced the financial and environmental costs of the European cash industry. Thanks to pooled research and development expertise, it was possible to design highly innovative and secure banknotes. …