Across the Euro-zone the start of 2002 marked the beginning of new currency Euro. But to make this a reality, attempts to create a single currency go back 20 years.
The “euro” is the name of the proposed single currency of the European Community. The ECU is currently the basis for the European Monetary System. The European Monetary System was launched on March 13, 1979, the system was based on average behavior of the participant countries of the European Community. The first stage was to have been completed by Jan. 1, 1994, and involved the elimination of “all restrictions on the movement of capital between Member States, and between Member States and third countries”. This goal was not actually achieved.
The second stage began on Jan. 1, 1994, with the creation of the European Monetary Institute (EMI) in Frankfurt, Germany. The EMI was a precursor to a proposed European Central Bank, which in the future is supposed to implement a common European monetary policy, conduct foreign exchange operations, hold reserves of member countries, and promote smooth payment mechanisms. The goals of the EMI itself were more modest.
The third stage is supposed to come about on Jan. 1, 1999, at which time countries will irrevocably fix their currencies to the euro (=ECU), after which national currencies will be phased out during a transition period. During transition, the euro and the national currency will circulate side by side. The EMI will be dissolved into a European Central Bank (ECB), which will determine a common monetary policy. Government bonds will be denominated in euros, and some countries, like France, will convert existing debt to euros. The current head of the central bank of the Netherlands, Wim Duisenberg, is expected to become the first president of the ECB.
During a three-year transition period, 1999-2002, European companies will convert their accounts to euros. Then, in 2002, euro notes and coins will be circulated in the different countries.
On New Year’s day (2002) euro banknotes and coins were introduced not only in the 12 countries of the European Union, but also in a dozen mini-states, international protectorates and overseas territories.
Some describe it as the biggest monetary changeover in history.
Celebrations were held in many European capitals, with fireworks and concerts in Frankfurt, the home of the European Central Bank to welcome Euro.