Euro Definition

The euro is the single currency shared by 20 European Union member states which collectively comprise the euro area, also known as the eurozone. These member states have replaced their national currencies with the euro, participating in the Economic and Monetary Union (EMU) and coordinating their economic policies to support the broader economic goals of the EU.

The euro was initially introduced in 1999 as “book money,” a non-physical form used for electronic transactions and accounting purposes. Eleven of the then 15 EU member states formed the original euro area. Greece joined in 2001, shortly before the physical euro banknotes and coins were introduced in 2002. Subsequent years saw further expansion: Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014), Lithuania (2015), and most recently, Croatia (2023).

While all EU members are part of the Economic and Monetary Union, not all use the euro. Denmark has a specific “opt-out” agreement, allowing it to remain outside the euro area while retaining the option to join in the future. Sweden, while obligated to eventually adopt the euro, has not yet met the necessary economic convergence criteria for membership.

Several other EU member states—those that joined the EU in 2004, 2007, and 2013—also haven’t yet adopted the euro. These countries joined after the euro was established and didn’t initially fulfill the required conditions for euro area entry. They are committed to adopting the euro once they meet these criteria and are currently classified as “Member States with a derogation.”

Certain non-EU countries have also adopted the euro through special monetary agreements with the European Union. Andorra, Monaco, San Marino, and Vatican City use the euro as their official currency and have the right to issue their own euro coins, subject to specific limits. However, because they are not EU members, they are not considered part of the euro area. Their usage of the euro stems from individual agreements rather than full membership in the European Union’s economic and monetary framework.