International status and usage of the euro

The international status and usage of the euro has grown since its launch in 1999. When the euro formally replaced 12 currencies on 1 January 2002, it inherited their use in territories such as Montenegro and they replaced minor currencies tied to the pre-euro currencies such as in Monaco. Three small states have been given a formal right to use the euro, and to mint their own coins, but all other usage has been unofficial outside the eurozone

Eurozone

The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...

(the EU states who have adopted the euro). With or without an agreement these countries, unlike those in the eurozone, do not participate in the European Central Bank

European Central Bank

The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...

or the Euro Group

Euro Group

The Euro Group or Eurogroup is a meeting of the finance ministers of the eurozone . It is the political control over the euro currency and related aspects of the EU's monetary union such as the Stability and Growth Pact...

.

Its international usage has also grown in its usage as a trading currency, acting as an economic or political alternative to using the United States dollar. Its increasing usage in this sense has led to it becoming the only significant challenger to the US dollar as the world main reserve currency

Reserve currency

A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...

States with issuing rights

	State	Adopted	Agreement	Pop.
	Monaco			32,671
	San Marino			29,615
	Vatican City			800

Several states outside the EU have adopted the euro as their currency. For formal adoption, including the right to mint their own coins, a monetary agreement must be concluded. Agreements have been concluded with Monaco, San Marino, and Vatican City. All of these states previously used versions of yielded member state currencies. The Vatican and San Marino had their currencies pegged

Fixed exchange rate

A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...

to the Italian lira

Italian lira

The lira was the currency of Italy between 1861 and 2002. Between 1999 and 2002, the Italian lira was officially a “national subunit” of the euro...

(Vatican

Vatican lira

The lira was the currency of the Vatican City between 1929 and 2002.-History:The Papal States, by then reduced to a smaller area close to Rome, used its own lira between 1866 and 1870, after which it ceased to exist...

and Sammarinese lira) and Monaco used the Monegasque franc

Monegasque franc

The franc was the official currency of the Principality of Monaco until 2002 , when it changed to the euro. The franc was subdivided into 100 centimes or 10 decimes. The Monégasque franc circulated alongside the French franc with the same value...

, which was pegged on a 1:1 basis to the French franc

French franc

The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money...

.

These countries concluded agreements with EU and member states (Italy in the case of San Marino and Vatican City and France in the case of Monaco) allowing them to use and mint a limited amount of euro (with their own national symbols on the obverse side

Obverse and reverse

Obverse and its opposite, reverse, refer to the two flat faces of coins and some other two-sided objects, including paper money, flags , seals, medals, drawings, old master prints and other works of art, and printed fabrics. In this usage, obverse means the front face of the object and reverse...

) to be valid throughout the Eurozone. They do not however print banknotes. A similar agreement is being negotiated with Andorra (see below).

Territories outside EU

There are a number of French territories

Overseas departments and territories of France

The French Overseas Departments and Territories consist broadly of French-administered territories outside of the European continent. These territories have varying legal status and different levels of autonomy, although all have representation in the Parliament of France , and consequently the...

and a UK sovereign military base outside the EU that have adopted the euro as their currency, while other territories have local currencies usually pegged to the euro. Agreements were concluded for two overseas territories of France. Saint-Pierre-et-Miquelon off the coast of Canada, and Mayotte

Mayotte

Mayotte is an overseas department and region of France consisting of a main island, Grande-Terre , a smaller island, Petite-Terre , and several islets around these two. The archipelago is located in the northern Mozambique Channel in the Indian Ocean, namely between northwestern Madagascar and...

in the Indian Ocean are outside the EU but have been allowed to use the euro as their currency. However as they are under French jurisdiction they cannot mint their own coins.

With the adoption of the euro in Cyprus, the Sovereign Base Areas

Sovereign Base Areas

The Sovereign Base Areas are military bases located on territory in which the United Kingdom is sovereign, but which are separated from the ordinary British territory....

of Akrotiri and Dhekelia

Akrotiri and Dhekelia

The Sovereign Base Areas of Akrotiri and Dhekelia are two British-administered areas comprising a British Overseas Territory on the island of Cyprus administered as Sovereign Base Areas of the United Kingdom...

, which had previously used the Cypriot pound

Cypriot pound

The pound, also known as the lira , was the currency of Cyprus, including the Sovereign Base Areas in Akrotiri and Dhekelia, until 31 December 2007, when the Republic of Cyprus adopted the euro...

, also adopted the euro. The base areas are overseas territories

British overseas territories

The British Overseas Territories are fourteen territories of the United Kingdom which, although they do not form part of the United Kingdom itself, fall under its jurisdiction. They are remnants of the British Empire that have not acquired independence or have voted to remain British territories...

of the United Kingdom, but are outside of the EU and under military jurisdiction. However their laws and currency have been aligned with those of the Republic of Cyprus, leading to the euro's adoption in the two areas.

On 22 February 2007, Saint Barthélemy

Saint Barthélemy

Saint Barthélemy , officially the Territorial collectivity of Saint Barthélemy , is an overseas collectivity of France. Often abbreviated to Saint-Barth in French, or St. Barts in English, the indigenous people called the island Ouanalao...

and Saint Martin

Saint Martin (France)

Saint Martin , officially the Collectivity of Saint Martin is an overseas collectivity of France located in the Caribbean. It came into being on 15 July 2007, encompassing the northern parts of Saint Martin island and neighbouring islets, the largest of which is Île Tintamarre...

were politically separated from Guadeloupe

Guadeloupe

Guadeloupe is an archipelago located in the Leeward Islands, in the Lesser Antilles, with a land area of 1,628 square kilometres and a population of 400,000. It is the first overseas region of France, consisting of a single overseas department. As with the other overseas departments, Guadeloupe...

to form two new French overseas collectivities; their status in the EU was briefly in a state of legal limbo until ratification of the Treaty of Lisbon

Treaty of Lisbon

The Treaty of Lisbon of 1668 was a peace treaty between Portugal and Spain, concluded at Lisbon on 13 February 1668, through the mediation of England, in which Spain recognized the sovereignty of Portugal's new ruling dynasty, the House of Braganza....

reaffirmed both territories remained fully included in the EU. The euro continued to be used in both territories through this time period without incident. Saint Barthélemy will withdraw from the EU and become one of the EU Overseas Countries and Territories. That's why an agreement about Euro usage there was signed.

On 29 March 2009 the referendum

Mahoran status referendum, 2009

A referendum on becoming an overseas department of France was held in Mayotte on 29 March 2009. Mayotte had been an overseas collectivity of France since 2003...

in Mayotte

Mayotte

resulted in it becoming an integral part of France

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

. The process of aligning with the laws of France (and thus EU) isn't finished and that's why there still isn't an EU Council decision to change Mayotte status from an OCT to an OMR where EU laws apply without separate agreements.

Territory	Agreement	Pop.	Notes
Akrotiri and Dhekelia Akrotiri and Dhekelia The Sovereign Base Areas of Akrotiri and Dhekelia are two British-administered areas comprising a British Overseas Territory on the island of Cyprus administered as Sovereign Base Areas of the United Kingdom...	Via treaty	14,500	Sovereign military base
Mayotte Mayotte Mayotte is an overseas department and region of France consisting of a main island, Grande-Terre , a smaller island, Petite-Terre , and several islets around these two. The archipelago is located in the northern Mozambique Channel in the Indian Ocean, namely between northwestern Madagascar and...		186,452	Became an integral part of France, and hence the EU and the Eurozone, in 2011.
Saint Pierre and Miquelon		6,125
French Southern and Antarctic Lands	None	140

Other users

	State/Territory	Adopted	Seeking	Pop.	Notes
	Andorra		Agreement	82,000	Seeking issuing agreement

}
|
| Membership
|align="right"| 2,100,000
|Seeking membership
|-
|

| Montenegro
|
| Membership
|align="right"| 684,736
|Seeking membership
|}
Andorra does not have an official currency and hence no specific euro coins. It previously used the French franc

French franc

and Spanish peseta

Spanish peseta

The peseta was the currency of Spain between 1869 and 2002. Along with the French franc, it was also a de facto currency used in Andorra .- Etymology :...

as de facto legal tender currency. There has never been a monetary arrangement with either Spain or France; however, the EU and Andorra are currently in negotiations regarding the official status of the euro in Andorra. According to Andorran officials, Andorra would have minted its own euro coins for the first time in 2006; , this has not yet happened, partially due to stalling regarding banking secrecy in December 2005.

Montenegro and Kosovo have also used the euro since its launch, as they previously used the German mark rather than the Yugoslav dinar

Yugoslav dinar

The dinar was the currency of the three Yugoslav states: the Kingdom of Yugoslavia , the Socialist Federal Republic of Yugoslavia and the Federal Republic of Yugoslavia between 1918 and 2003. The dinar was subdivided into 100 para...

. This was due to political concerns that Serbia would use the currency to destabilise these provinces (Montenegro was then in a union with Serbia) so they received western help in adopting and using the mark (though there was no restriction on the use of the dinar or any other currency). They switched to the euro when the mark was replaced but have no agreement with the ECB; rather the country depends only on euros already in circulation. Kosovo also still uses the Serbian dinar in areas mainly populated by the Serbian minority.

The use of the euro in Montenegro and Kosovo has helped stabilise their economies, and for this reason the adoption of the euro by small states has been encouraged by former Finance Commissioner

European Commissioner for Economic & Financial Affairs

The Commissioner for Economic and Monetary Affairs and the Euro is the member of the European Commission responsible for economic and financial affairs. The current Commissioner is Olli Rehn .-Responsibilities:...

Joaquín Almunia

Joaquín Almunia Amann is a Spanish politician and prominent member of the European Commission, currently responsible for Competition under the second mandate of President Barroso. He was previously responsible for Economic and Monetary Affairs in Barroso's previous mandate...

. Former European Central Bank President Jean-Claude Trichet

Jean-Claude Trichet

Jean-Claude Trichet is a French civil servant who was the president of the European Central Bank, a position he held from 2003 to 2011. He is also a member of the Board of Directors of the Bank for International Settlements...

has stated the ECB – which does not grant representation to those who unilaterally adopt the euro – neither supports nor deters those wishing to use the currency.

Usage in states with another official currency

In various countries the Euro is accepted by some merchants albeit not being official currency there. Additionally sometimes it's used for pricing purposes even if the actual payments are made in the official currency (i.e. for real estates).

EU members outside the Eurozone

The Swedish town Höganäs

Höganäs

Höganäs is a locality and the seat of Höganäs Municipality, Skåne County, Sweden with 13,550 inhabitants in 2005.Höganäs is nationally known for its ceramics industry, Höganäs Keramik. Höganäs Keramik is part of Iittala Group....

, does since 1 January 2009 generally allow shop payments in euro alongside of the Swedish krona

Swedish krona

The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...

. Widespread usage, though unofficial, is also present in towns such as Haparanda

Haparanda

Haparanda is a locality and the seat of Haparanda Municipality in Norrbotten County, Sweden with 4,778 inhabitants in 2005. It is adjacent to Tornio, Finland...

, on the border with Finland. Euro is often accepted in shops near other borders to the Eurozone, like the western borders of Poland, Czech republic and Hungary.

Northern Cyprus

EU law and treaties

European Union law

European Union law is a body of treaties and legislation, such as Regulations and Directives, which have direct effect or indirect effect on the laws of European Union member states. The three sources of European Union law are primary law, secondary law and supplementary law...

application to Northern Cyprus is currently suspended. Its territory is claimed by the Republic of Cyprus, one of the EU member states, but currently Northern Cyprus is under Turkish Republic of Northern Cyprus

Turkish Republic of Northern Cyprus

Northern Cyprus or North Cyprus , officially the Turkish Republic of Northern Cyprus , is a self-declared state that comprises the northeastern part of the island of Cyprus...

(TRNC) control. TRNC isn't recognised by the Republic of Cyprus (which claims jurisdiction over the whole island), the European Union or any country other than Turkey

Turkey

Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...

. EU law would start to apply in Northern Cyprus if it comes under control of the Republic of Cyprus (if the Cyprus dispute

Cyprus dispute

The Cyprus dispute is the result of the ongoing conflict between the Republic of Cyprus and Turkey, over the Turkish occupied northern part of Cyprus....

is resolved trough unification), whose official legal tender

Legal tender

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

is the Euro

Euro

The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

.

Presently, the TRNC government has declared the Turkish lira

Turkish lira

The Turkish lira is the currency of Turkey and the de facto independent state of the Turkish Republic of Northern Cyprus. The lira is subdivided into 100 kuruş...

to be its legal tender. Nevertheless usage of the Euro in Northern Cyprus is seen as a way to boost intra-Cypriot trade and reduce dependence on Turkey and is widely accepted. With the use of the euro across the border

United Nations Buffer Zone in Cyprus

The United Nations Buffer Zone in Cyprus runs for more than along what is known as the Green Line and has an area of . The zone partitions the island of Cyprus into a southern area effectively controlled by the government of the Republic of Cyprus , and the northern area...

helping economic integration, the arrival of the euro has been hailed as a major advance in solidifying peace and unification on the island. The Cypriot euro coins

Cypriot euro coins

Cypriot euro coins feature three separate designs for the three series of coins. Cyprus has been a member of the European Union since 1 May 2004, and is a member of the Economic and Monetary Union of the European Union...

, using the Greek

Greek language

Greek is an independent branch of the Indo-European family of languages. Native to the southern Balkans, it has the longest documented history of any Indo-European language, spanning 34 centuries of written records. Its writing system has been the Greek alphabet for the majority of its history;...

and Turkish

Turkish language

Turkish is a language spoken as a native language by over 83 million people worldwide, making it the most commonly spoken of the Turkic languages. Its speakers are located predominantly in Turkey and Northern Cyprus with smaller groups in Iraq, Greece, Bulgaria, the Republic of Macedonia, Kosovo,...

languages, have been designed to avoid any bias towards any particular area of the island.

Some in the Turkish Republic of Northern Cyprus (TRNC) have called for the unilateral adoption of the euro by that state (similarly to those states).

Others cases

The Euro is used officially at some other places outside EU. The Istanbul-Atatürk Airport

Atatürk International Airport

Atatürk International Airport is the major international airport in Istanbul, Turkey. Opened in 1924 and located in Yeşilköy, on the European side of the city, it is west of the city centre. In 1980, the airport was renamed to Atatürk International Airport in honor of Mustafa Kemal Atatürk, the...

uses euro as the official currency in shops, and uses exchange rates for some other currencies such as Turkish Lira and US dollar.

Trading currency

In 1998, Cuba announced that it would replace the US$ with the euro as its official currency for the purposes of international trading. On 1 December 2002, North Korea did the same. (Its internal currency, the wŏn

North Korean won

The won is the currency of North Korea . It is subdivided into 100 chon. The won is issued by the Central Bank of the Democratic People's Republic of Korea...

, is not convertible

Convertibility

Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged....

and thus cannot be used to purchase foreign goods. The euro also enjoys popularity domestically, especially among resident foreigners.) Syria followed suit in 2006.

In 2000, President of Iraq

President of Iraq

The President of Iraq is the head of state of Iraq and "safeguards the commitment to the Constitution and the preservation of Iraq's independence, sovereignty, unity, the security of its territories in accordance with the provisions of the Constitution." The President is elected by the Council of...

Saddam Hussein

Saddam Hussein Abd al-Majid al-Tikriti was the fifth President of Iraq, serving in this capacity from 16 July 1979 until 9 April 2003...

began the sale of his country's oil denominated in euros rather than dollars since the majority of Iraqi oil trade was with the EU, India and China rather than the United States. Several other oil producing countries stated they would follow suit but when Iraq was invaded in 2003

2003 invasion of Iraq

The 2003 invasion of Iraq , was the start of the conflict known as the Iraq War, or Operation Iraqi Freedom, in which a combined force of troops from the United States, the United Kingdom, Australia and Poland invaded Iraq and toppled the regime of Saddam Hussein in 21 days of major combat operations...

, the new US interim administration immediately switched all sales of oil back to the US dollar. Since then, Iran has maintained its policy of demanding euros from the sale of oil towards Europe and Asia, and plans to set up an oil exchange

Iranian oil bourse

The Iranian Oil Bourse International Oil Bourse, Iran Petroleum Exchange Kish Exchange or Oil Bourse in Kish is a commodity exchange which opened on February 17, 2008. It was created by cooperation between Iranian ministries, the Iran Mercantile Exchange and other state and private institutions...

denominated in euro.

Pegged currencies

Currently there are several currencies pegged to the euro, some with fluctuation bands around a central rate and others with no fluctuations allowed around the central rate. This can be seen as a safety measure, especially for currencies of areas with weak economies. The euro is seen as a stable currency, i.e. there are no dramatic appreciations or depreciations of its value that might suddenly damage the economy or harm trade. Thus it provides security to traders and people holding that currency.

In 2011 the Swiss franc was rapidly appreciating against the euro, harming its exports to the eurozone. In response, Switzerland implemented a cap to the Swiss franc's value. This was not so much a peg, as they were merely limiting its highest value and not its lowest.

State	Population	Area	Code	National currency	Central rate	Pegged since	Fluctuation band	Formerly pegged to	EMU
Bosnia and Herzegovina	4,590,310	51,129 km²	BAM	B&H convertible mark Bosnia and Herzegovina convertible mark The Bosnia and Herzegovina convertible mark is the currency of Bosnia and Herzegovina. It is divided into 100 fenings...	1.955830	19991 January 1999	0.00%	DEM (from 21 November 1995)
Bulgaria	7,385,367	110,910 km²	BGN	Bulgarian lev Bulgarian lev The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...	1.955830	19991 January 1999	0.00%	DEM (from 1997)
Comoros	690,948	2,170 km²	KMF	Comorian franc Comorian franc The franc is the official currency of Comoros. It is nominally subdivided into 100 centimes, although no centime denominations have ever been issued.-History:...	491.9678	19991 January 1999	0.00%	FRF French franc The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money... (from 23 November 1979)
Denmark	5,475,791	43,094 km²	DKK	Danish krone Danish krone The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...	7.460380	19991 January 1999	2.25%	XEU	ERM2 European Exchange Rate Mechanism The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
Cape Verde	499,796	4,033 km²	CVE	Cape Verdean escudo	110.2650	19991 January 1999	0.00%	PTE Portuguese escudo The escudo was the currency of Portugal prior to the introduction of the Euro on 1 January 1999 and its removal from circulation on 28 February 2002. The escudo was subdivided into 100 centavos.... (from middle of 1998)
Latvia	2,307,000	64,589 km²	LVL	Latvian lat	0.702804	20051 January 2005	15.0% (de facto 1%)		ERM2 European Exchange Rate Mechanism The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
Lithuania	3,483,972	65,303 km²	LTL	Lithuanian litas Lithuanian litas The Lithuanian litas is the currency of Lithuania. It is divided into 100 centų...	3.452800	20022 February 2002	15.0% (de facto 0%)	US$ (from 1 April 1994)	ERM2 European Exchange Rate Mechanism The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
Morocco (inc. West Sahara)	33,657,259	712,550 km²	MAD	Moroccan dirham Moroccan dirham The dirham is the currency of Morocco. The plural form is pronounced darahim, although in French and English "dirhams" is commonly used. Its ISO 4217 code is "MAD". It is subdivided into 100 santimat . The dirham is issued by the Bank Al-Maghrib, the central bank of Morocco...	≈ 10.0	19991 January 1999	–
São Tomé e Príncipe	163,000	1,001 km²	STD	São Tomé and Príncipe dobra São Tomé and Príncipe dobra The dobra is the currency of São Tomé and Príncipe. It is abbreviated Db and is divided into 100 cêntimos, although inflation has rendered the cêntimo obsolete. The dobra was introduced in 1977, replacing the escudo at par....	24,500	20101 January 2010	0.00%
XOF currency union; Benin Burkina Faso Côte d'Ivoire Guinea-Bissau Mali Niger Senegal Togo	70,931,986	3,269,077 km²	XOF	West African CFA franc West African CFA franc The West African CFA franc is the currency of eight independent states in West Africa: Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Sénégal and Togo. The acronym CFA stands for Communauté financière d'Afrique...	655.957	19991 January 1999	0.00%	FRF French franc The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money... (from 17 October 1948)
XAF currency union; Cameroon Central African Republic Chad Republic of the Congo Equatorial Guinea Gabon	38,750,133	2,757,528 km²	XAF	Central African CFA franc Central African CFA franc The Central African CFA franc is the currency of six independent states in central Africa, Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea and Gabon. CFA stands for Coopération financière en Afrique centrale...	655.9570	19991 January 1999	0.00%	FRF French franc The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money... (from 17 October 1948)
XPF currency union; French Polynesia French Polynesia French Polynesia is an overseas country of the French Republic . It is made up of several groups of Polynesian islands, the most famous island being Tahiti in the Society Islands group, which is also the most populous island and the seat of the capital of the territory... New Caledonia New Caledonia New Caledonia is a special collectivity of France located in the southwest Pacific Ocean, east of Australia and about from Metropolitan France. The archipelago, part of the Melanesia subregion, includes the main island of Grande Terre, the Loyalty Islands, the Belep archipelago, the Isle of... Wallis and Futuna Wallis and Futuna Wallis and Futuna, officially the Territory of the Wallis and Futuna Islands , is a Polynesian French island territory in the South Pacific between Tuvalu to the northwest, Rotuma of Fiji to the west, the main part of Fiji to the southwest, Tonga to the southeast,...	520,938	19,597 km²	XPF	CFP franc CFP franc The CFP franc is the currency used in the French overseas collectivities of French Polynesia, New Caledonia and Wallis and Futuna. The initials CFP originally stood for Colonies Françaises du Pacifique...	119.3317	19991 January 1999	0.00%	FRF French franc The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money... (from 21 October 1949)

The Bulgarian Lev is pegged to the euro through a currency board

Currency board

A currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target....

. Estonia and Lithuania joined ERM II on 28 June 2004, Cyprus, Latvia and Malta joined on 2 May 2005; these currencies had been pegged to the Euro before joining ERM II. Malta was pegged to a basket of currencies

Currency basket

A currency basket is a portfolio of selected currencies with different weightings. A currency basket is commonly used to minimize the risk of currency fluctuations. An example of a currency basket is the European Currency Unit that was used by the European Community member states as the unit of...

where the Euro had a 70% weighting. As part of ERM II, the currencies have a fluctuation band of ±15%. However, some states have committed to a tighter fluctation band.

Convertible mark

Bosnia and Herzegovina convertible mark

The Bosnia and Herzegovina convertible mark is the currency of Bosnia and Herzegovina. It is divided into 100 fenings...

is the currency of Bosnia and Herzegovina and it was fixed to 1 German Mark when it was introduced on the basis of the Dayton agreement

Dayton Agreement

The General Framework Agreement for Peace in Bosnia and Herzegovina, also known as the Dayton Agreement, Dayton Accords, Paris Protocol or Dayton-Paris Agreement, is the peace agreement reached at Wright-Patterson Air Force Base near Dayton, Ohio in November 1995, and formally signed in Paris on...

; consequently after introduction of the euro, the Convertible mark uses the German-mark-to-euro rate at 1.95583 BAM per euro.

Reserve currency status

The euro is a major global reserve currency

Reserve currency

A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...

, sharing that status with the U.S. dollar (USD), which continues to be the primary reserve of most commercial and central banks.

Since its introduction, the euro has been the second most widely held international reserve currency

Reserve currency

A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...

after the U.S. dollar. The euro inherited this status from the German mark

German mark

The Deutsche Mark |mark]], abbreviated "DM") was the official currency of West Germany and Germany until the adoption of the euro in 2002. It is commonly called the "Deutschmark" in English but not in German. Germans often say "Mark" or "D-Mark"...

, and since its introduction, it has increased its standing, mostly at the expense of the dollar. The increase of 4.4% in 2002 is due to the introduction of euro banknotes and coins in January 2002.

The possibility of the euro's becoming the first international reserve currency is now widely debated among economists.
Former Federal Reserve Chairman Alan Greenspan

Alan Greenspan

Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

gave his opinion in September 2007 that the euro could indeed replace the U.S. dollar as the world's primary reserve currency. He said it is "absolutely conceivable that the euro will replace the dollar as reserve currency, or will be traded as an equally important reserve currency."
Additionally, there has been suggestion that recent weakness of the US dollar might encourage parties to increase their reserves in euro at the expense of the dollar. In the second term of 2007, euro as a reserve currency had reached a record level of 25.6% (a +0.8% increase from the year before) – at the expense of US dollar, which dropped to 64.8% (a drop of 1.3% from the year before). By the end of 2007, shares of euro increased to 26.4% as the dollar slumped to its lowest level since records began in 1999, 63.8%.

The exact situation varies from country to country, for example those with dollar pegs have greater dollar reserves and those with euro pegs have greater euro reserves. In 2009, Russia's foreign reserves in euro exceed dollar reserves for the first time; Russia held 47.5% (up from 42% in 2008) in euro and 41.5% (down from 47%) in dollar leading the Central Bank of Russia to announce the euro had become the reserve currency of Russia. The usage of the euro is particularly strong in Eastern Europe, not surpassingly in those that have joined the EU, with 54.8% of all loans in Bulgaria, and 85.2% in Latvia, being issued in euro rather than the local currencies.
The following table shows central banks allocated reserves in euros and US dollar. The impact of the growing unallocated reserves on the shares of euros vs US dollar has been studied only very recently .
A currency is attractive for international transactions when it demonstrates stability, a well-developed financial market to trade the currency, and acceptability to others. While the euro has made substantial progress, a few challenges undermine the ascension of the euro as a major reserve currency. Persistent excessive budget deficits of some member nations, economically weak new members, conservatism of financial markets, and inertia or path dependence

Path dependence

Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant....

are important factors keeping the euro as a junior international currency to the U.S. dollar. However, at the same time, the USD has increasingly suffered from a double deficit and has its own concerns.

As the euro becomes a new reserve currency, Eurozone governments will enjoy substantial benefits. Since money is an interest-free loan to the issuing government by the holder of the currency, foreign reserves act as a subsidy to the country minting the currency (see Seigniorage

Seigniorage

Seigniorage can have the following two meanings:* Seigniorage derived from specie—metal coins, is a tax, added to the total price of a coin , that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.* Seigniorage derived from notes is more...

). However, reserve status also holds risks, as the currency may become overvalued, hurting European exporters and potentially exposing the European economy to influence by external factors who hold large quantities of euros.

External links

ECB latest press release on central rates and bands for ERM II

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States with issuing rights

Territories outside EU

Other users

Usage in states with another official currency

EU members outside the Eurozone

Northern Cyprus

Others cases

Trading currency

Pegged currencies

Reserve currency status

See also

External links