Eurosystem

On 31 December 1998, the exchange rates were irrevocably fixed between the euro and the currencies of the Member States which participated in the third stage of the Economic Monetary Union (EMU).

On 1 January 1999, the euro came into being as a currency and the Eurosystem was set up, comprising the European Central Bank (ECB) and all the central banks of the euro area, responsible for defining the monetary policy for the new euro area.

This marked the beginning of a transition period which ended on 1 January 2002 with the introduction of euro banknotes and coins and the withdrawal of national banknotes and coins.

During this adaptation period, the euro existed only as a transactional currency, used in the financial markets. Meanwhile, administrations and companies put in place measures to adapt their accounting, to display prices in dual currencies on the labels in shops, etc. All of this was underpinned by a comprehensive communications plan aimed at familiarising the general public with the new banknotes and coins introduced into the system.

In 2000, the Council decided that Greece should join the euro area, which it did on 1 January 2001.

These years marked the beginning of the production of euro banknotes and coins. To facilitate the transition and physical entry of the euro on the scheduled date, the central banks distributed part of the cash to commercial banks (around €144 bn) in advance so that they, in turn, could distribute them among retailers to avoid cash flow problems.

On 1 January 2002, the new currency began circulating. By 3 January, 96% of the automated teller machines of the euro area were already dispensing euro notes and, one week after the launch, over half of all cash transactions carried out were in euros.

National banknotes and coins stopped being legal tender on 28 February 2002; the euro had become the new currency for over 300 million citizens in twelve countries.

The new incorporations

On 1 January 2007, the euro became legal tender in Slovenia; on 1 January 2008 it took over in Cyprus and Malta; on 1 January 2009, in the Slovak Republic; and on 1 January 2011, in Estonia.