DOCSLIB.ORG

Analysis on the Euro

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Analysis on the Euro Financial Markets and Instruments FIN 3560 – 01 Professor Michael A. Goldstein, PH.D. The Effect of Interest Rates on the Euro’s Foreign Exchange Rate Andrea Canavesio Joseph Hage Chahine Felipe Piedrahita 12/5/2011 I Table of Contents: Executive Summary…………………………………………………………………………………………………………………………………… Background of the Euro……………………………………………………………………………………………………………………………1 Brief history of the European Union and the Euro……………………………………………………………………….1 The Monetary Snake…………………………………………………………………………………………………….…………….1 The European Monetary System…………………………………………………………………………………….…………..2 The Exchange Rate Mechanism……………………………………………………………………………………….………….3 Euro Convergence Criteria…………………………………………………………………………………………………………..4 Current European Debt Crisis……………………………………………………………………………………………………………………5 Foreign Exchange Rates Theory……………………………………………………………………………………………………….………7 Short-run Exchange Rates…………………………………………………………………………………………………….…….7 Long-run Exchange Rates….………………………………………………………………………………………………………..8 Purpose of Analysis………………………………………………………………………………………………………………….…8 Variables…………………………………………………………………………………………………………………………………….9 EURIBOR………………………………………………………………………………………………………………….……..9 LIBOR……………………………………………………………………………………………………………………..………9 Federal Funds Rate……………………………………………………………………………………………….………..9 Inflation – Real and Expected …………………………………………………………………………………………9 GDP Growth………………………………………………………………………………………………………………….10 Analysis of the Euro-US Dollar exchange rate…………………………………………………………………………………………10 Analysis of Assumptions……………………………………………………………………………………………………………10 P-value…………………………………………………………………………………………………………………………10 1999 – 2011……………………………………………………………………………………………………………………………...11 Best fit………………………………………………………………………………………………………………………….11 Interest rates………………………………………………………………………………………………………………..11 Simple regressions……………………………………………………………………………………………………..…12 2000 – 2006 …………………………………………………………………………………………………………………………..…13 Best fit……………………………………………………………………………………………………………………….…13 Interest rates………………………………………………………………………………………………………………..13 Simple regressions………………………………………………………………………………………………………..14 2007 – 2011………………………………………………………………………………………………………………………………15 Best fit……………………………………………………………………………………………………………………….…15 Interest rates………………………………………………………………………………………………………………..15 Simple regressions……………………………………………………………………………………………………..…16 Conclusion………………………………………………………………………………………………………………………………………….….17 References………………………………………………………………………………………………………………………………………..……18 Exhibits……………………………………………………………………………………………………………………………………………….…19 Regression Outputs………………………………………………………………………………………………………………………………..21 1999 – 2011………………………………………………………………………………………………………………………………21 Simple regressions………………………………………………………………………………………………………..21 Multiple regressions……………………………………………………………………………………………………..23 2000 – 2006………………………………………………………………………………………………………………………………26 Simple regressions………………………………………………………………………………………………………..26 Multiple regressions……………………………………………………………………………………………………..28 2007 – 2011………………………………………………………………………………………………………………………………31 Simple regressions………………………………………………………………………………………………………..31 Multiple regressions…………………………………………………………………………………………………..…33 Executive Summary: In analyzing the Euro we have decided to focus on its history, theory behind short-run and long- run foreign exchange rates, and the factors that affect the foreign exchange rate of the Euro. History has provided us with a basis of understanding as to how the Euro has affected the economy of the Euro zone and it has shown us what the purpose of the creation of this currency was. In order to perform our analysis we also had to have a general understanding of how exactly foreign exchange rates are determined and what are the factors affecting changes in these rates. The purpose of our analysis was to determine if the theory behind foreign exchange rates holds true and to what extent do the variables that theoretically affect exchange rates actually affect them. Along with our analysis of how the theory behind foreign exchange rates holds in the real world we will also be looking at why the Euro is valued higher than Dollar even though the Euro zone economy is in worse shape than the American economy. Analysis of the variables that theoretically affect foreign exchange rates should provide us with an answer as to why the EUR-USD exchange rate has been behaving this way. The variables we believe are the equivalents of EUR-USD exchange rates according to theory are LIBOR, EURIBOR, the Federal Funds rate, Euro zone inflation and Euro zone GDP growth. In order to analyze the effect of each of these variables on the EUR-USD exchange rate we have run several regressions. These regressions have provided us with an answer as to what has the most significant factors of these foreign exchange rates. Our belief is that the Euro is valued higher than the US Dollar because interest rates are much higher than in the US. We believe these higher interest rates are much more attractive to foreign investors. This causes foreign investors to demand the Euro in the foreign exchange market which in turn leads to its appreciation. Through our analysis we will be able to determine if our hypothesis is correct. Background on the Euro Brief history of the European Union and the Euro The European Union along with the Euro’s conception can be traced back to the founding of the European Community in 1967, an entity comprising of the three main economic pillars of Europe at the time: the European Atomic Energy community, the European Economic Market, and the European Coal and Steel Community. In point of fact, the driving factor behind the creation of the EU was a political move aimed at creating an economic interdependence between European countries, particularly France and Germany, in order to avoid future wars given the disastrous consequences of World War II1. The European Economic Market laid ground for the European Monetary System (EMS) which aimed to create an integrative economic system by eliminating trade barriers, promoting fiscal integration, and reducing trade hindrances related to currency exchange rates fluctuations. By doing this, the EMS would be able to sustain European monetary stability, resulting in the creation of the European Currency Unit (ECU). Even though the ECU was not a currency in circulation, it had clear diversification advantages for foreign investors, particularly since the Bretton Woods Agreement ended the convertibility of the US dollar to gold in 19712. The Maastricht Treaty signed in 1992 led to the creation of the formal European Union, constituted of the euro zone and its anteroom, the European Exchange Rate Mechanism (ERM). The ERM’s long term role was to stabilize exchange rates among members of the euro zone and assist in the convergence of their economies in view of the upcoming integration of a unique currency, the Euro. On January 1st 1999, the Euro officially replaced the European Currency Unit at par, 1 Euro being equal to 1 ECU. However, it was not until 2002 that the Euro came into circulation under its fiduciary form. The Monetary Snake Recognizing the fact that they were not only mutual clients, but major reciprocal suppliers as well; Western European countries created the Snake in the Tunnel policy in 1972 in order to strengthen and protect the economic interests that tied them to one another. These countries realized their commercial trades were vulnerable to volatile exchange rates, and could be the target of speculation. The various European currencies involved were able to move ±2.25% relative to their central rate 1 Marc Levine, Francis Kim, and Joel Siegel. The CPA Journal, April 1999 <http://www.nysscpa.org/cpajournal/1999/0499/Departments/D440499.HTM> 2 Ibid 1 against the US dollar, thus creating a narrow band of fluctuation for the participating currencies, the Tunnel being the US dollar. However, European currencies had fluctuation margins of ±4.5% among one another in relation to the US dollar, and the ever expanding leniency of the bands ultimately brought the Tunnel to collapse3. Since its very beginning, the economic turmoil from 1972 to 1978 proved the Monetary Snake to be unsustainable. The British Pound had to be withdrawn from the Snake a month after entering it, and never made a comeback, destabilized by the 1973 oil crisis and later hit by the 1976 Sterling crisis. Merely a year after its entry to the Snake in 1973, the Italian Lira had to exit, followed by the French Franc in 1974, and again later in 1976. By 1977, the Deutsche Mark was still following the Snake and dominating the Tunnel, and only three other currencies were able to keep up with the constraints. The necessity to elaborate a new monetary system was clear; a system that would prevent the Deutsche Mark from rising too high by weighting it to the weaker currencies of Germanys’ economic partners4. The European Monetary System: The European Monetary System (EMS) was introduced in 1979 after the notable failure of the Snake in the Tunnel policy. The EMS brought two main technical modifications building on the malfunctions of the Snake. First, instead of referring to the US Dollar, the currencies of the new system would use the newly created European Currency Unit (ECU) as a benchmark. The ECU was comprised of a weighted basket of currencies determined by the economic size of each participating EC member. Members of the EC could deposit gold and dollar reserves with the European Cooperation Fund for issuance of ECU currency, except for Greece which did not
Load more

Recommended publications
  • The Lira: Back in the Zone Panel Was Frequently Below the Lower Edge of the Band
    February 1997 I,Trends MA~Y It: were frequently realigned. The forward rate in the top The Lira: Back in the Zone panel was frequently below the lower edge of the band. Thus, these narrow target zones were not seen After more than four years, the Italian lira returned as credible by the market. Since reentry, however, the to the Exchange Rate Mechanism (ERM) of the forward rate, as shown in the lower panel, is well European Union (EU) on November 25, 1996. A within the target zone, indicating that market partici- speculative attack had forced the withdrawal of the pants expect the lira to remain within the target lira from the ERM on September 17, 1992. The zones. Thus, the current wide bands appear to be ERM commits member countries to maintain their more credible than the narrower bands of the earlier exchange rates within bilateral bands or target zones period. against all the other currencies. The lira is allowed to Christopher J. Neely fluctuate within margins of 15 percent on both sides of the mid-point of the target zone, known as the central parity, which is 1.0101 DM per 1000 lire for Target Zone, Spot and 1-year Forward Rate the bilateral band with Germany. Although target zones are said to offer the advantages of more stable DM per 1000 Lira exchange rates and greater inflation credibility, the 2.4 primary motivation of the Italian government for rejoining the ERM is the requirement that the lira Target Zone 2.0 remain within the target zone for at least two years before Italy can join the European Monetary Union Spot Rate (EMU).
    [Show full text]
  • The Euro: Internationalised at Birth
    The euro: internationalised at birth Frank Moss1 I. Introduction The birth of an international currency can be defined as the point in time at which a currency starts meaningfully assuming one of the traditional functions of money outside its country of issue.2 In the case of most currencies, this is not straightforwardly attributable to a specific date. In the case of the euro, matters are different for at least two reasons. First, internationalisation takes on a special meaning to the extent that the euro, being the currency of a group of countries participating in a monetary union is, by definition, being used outside the borders of a single country. Hence, internationalisation of the euro should be understood as non-residents of this entire group of countries becoming more or less regular users of the euro. Second, contrary to other currencies, the launch point of the domestic currency use of the euro (1 January 1999) was also the start date of its international use, taking into account the fact that it had inherited such a role from a number of legacy currencies that were issued by countries participating in Europe’s economic and monetary union (EMU). Taking a somewhat broader perspective concerning the birth period of the euro, this paper looks at evidence of the euro’s international use at around the time of its launch date as well as covering subsequent developments during the first decade of the euro’s existence. It first describes the birth of the euro as an international currency, building on the international role of its predecessor currencies (Section II).
    [Show full text]
  • Interview with Director of the Italian State Mint November 14, 2011 by Michael Alexander 2 Comments
    Interview with Director of the Italian State Mint November 14, 2011 By Michael Alexander 2 Comments Classic numismatic design has its roots in the ancient states of Athens and Rome. Today, this unparalleled tradition continues in the modern city of Rome at the Instituto Poligrafico Zecca dello Stato (IZPS), the Italian State Mint. As Italy celebrates 150 years of Unification in 2011, Michael Alexander of the London Banknote and Monetary Research Centre speaks to Angelo Rossi, Director of the IPZS about its past present and what’s in store for this prime producer of classical European coinage. For many world coin collectors, the coinage of the many Italian states before unification and those of Italy are considered among some of the most beautifully designed with classic renditions of historic persons, legendary and allegorical figures. Italy’s longest serving head of state, king, Victor Emanuel III (reigned 1900 – 1946) took a particular interest in the coinage of a unified Italy as he was a keen life-long coin collector. The former king’s collection was world renowned for including some of the most extraordinary rarities, (including some of the coins issued under his reign with his portrait) and much of it is on display in the Roman Museum to delight dedicated numismatists. Italian coinage has continued to carry on the long established tradition of classically designed small works of art which can be seen throughout their designs. Should you find yourself in Europe’s Eternal City, I can heartily recommend a visit to the Roman Museum as well as the Temple where the first Mint is said to have existed, a veritable plethora of homage to our beloved activity.
    [Show full text]
  • Interest Rate Spreads Implicit in Options: Spain and Italy Against Germany*
    Interest Rate Spreads Implicit in Options: Spain and Italy against Germany* Bernardino Adão Banco de Portugal Universidade Católica Portuguesa and Jorge Barros Luís Banco de Portugal University of York Abstract The options premiums are frequently used to obtain probability density functions (pdfs) for the prices of the underlying assets. When these assets are bank deposits or notional Government bonds it is possible to compute probability measures of future interest rates. Recently, in the literature there have been many papers presenting methods of how to estimate pdfs from options premiums. Nevertheless, the estimation of probabilities of forward interest rate functions is an issue that has never been analysed before. In this paper, we propose such a method, that can be used to study the evolution of the expectations about interest rate convergence. We look at the cases of Spain and Italy against Germany, before the adoption of a single currency, and conclude that the expectations on the short-term interest rates convergence of Spain and Italy vis-à-vis Germany have had a somewhat different trajectory, with higher expectations of convergence for Spain. * Please address any correspondence to Bernardino Adão, Banco de Portugal, Av. Almirante Reis, n.71, 1150 Lisboa, Portugal. I. Introduction Derivative prices supply important information about market expectations. They can be used to obtain probability measures about future values of many relevant economic variables, such as interest rates, currency exchange rates and stock and commodity prices (see, for instance, Bahra (1996) and SCderlind and Svensson (1997)). However, many times market practitioners and central bankers want to know the probability measure of a combination of economic variables, which is not directly associated with a traded financial instrument.
    [Show full text]
  • The Euro and Currency Unions October 2011 2 the Euro and Currency Unions | October 2011
    GLOBAL LAW INTELLIGENCE UNIT The euro and currency unions October 2011 www.allenovery.com 2 The euro and currency unions | October 2011 Key map of jurisdictions © Allen & Overy LLP 2011 3 Contents Introduction 4 Map of world currencies 4 Currency unions 5 Break-up of currency unions 6 Break-up of federations 6 How could the eurozone break up? 6 Rights of withdrawal from the eurozone 7 Legal rights against a member withdrawing from the eurozone unilaterally 7 What would a currency law say? 8 Currency of debtors' obligations to creditors 8 Role of the lex monetae if the old currency (euro) is still in existence 9 Creditors' rights of action against debtors for currency depreciation 10 Why would a eurozone member want to leave? - the advantages 10 Why would a eurozone member want to leave? - the disadvantages 11 History of expulsions 12 What do you need for a currency union? 12 Bailing out bankrupt member states 13 European fire-power 14 Are new clauses needed to deal with a change of currency? 14 Related contractual terms 18 Neutering of protective clauses by currency law 18 Other impacts of a currency change 18 Reaction of markets 19 Conclusion 20 Contacts 21 www.allenovery.com 4 The euro and currency unions | October 2011 Allen & Overy Global Law Intelligence Unit The euro and currency unions October 2011 Introduction The views of the executive of the Intelligence Unit as to whether or not breakup of the eurozone currency union This paper reviews the role of the euro in the context of would be a bad idea will appear in the course of this paper.
    [Show full text]
  • France À Fric: the CFA Zone in Africa and Neocolonialism
    France à fric: the CFA zone in Africa and neocolonialism Ian Taylor Date of deposit 18 04 2019 Document version Author’s accepted manuscript Access rights Copyright © Global South Ltd. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. Citation for Taylor, I. C. (2019). France à fric: the CFA Zone in Africa and published version neocolonialism. Third World Quarterly, Latest Articles. Link to published https://doi.org/10.1080/01436597.2019.1585183 version Full metadata for this item is available in St Andrews Research Repository at: https://research-repository.st-andrews.ac.uk/ FRANCE À FRIC: THE CFA ZONE IN AFRICA AND NEOCOLONIALISM Over fifty years after 1960’s “Year of Africa,” most of Francophone Africa continues to be embedded in a set of associations that fit very well with Kwame Nkrumah’s description of neocolonialism, where postcolonial states are de jure independent but in reality constrained through their economic systems so that policy is directed from outside. This article scrutinizes the functioning of the CFA, considering the role the currency has in persistent underdevelopment in most of Francophone Africa. In doing so, the article identifies the CFA as the most blatant example of functioning neocolonialism in Africa today and a critical device that promotes dependency in large parts of the continent. Mainstream analyses of the technical aspects of the CFA have generally focused on the exchange rate and other related matters. However, while important, the real importance of the CFA franc should not be seen as purely economic, but also political.
    [Show full text]
  • Treasury Reporting Rates of Exchange As of March 31, 1994
    iP.P* r>« •ini u U U ;/ '00 TREASURY REPORTING RATES OF EXCHANGE AS OF MARCH 31, 1994 DEPARTMENT OF THE TREASURY Financial Management Service FORWARD This report promulgates exchange rate information pursuant to Section 613 of P.L. 87-195 dated September 4, 1961 (22 USC 2363 (b)) which grants the Secretary of the Treasury "sole authority to establish for all foreign currencies or credits the exchange rates at which such currencies are to be reported by all agencies of the Government". The primary purpose of this report is to insure that foreign currency reports prepared by agencies shall be consistent with regularly published Treasury foreign currency reports as to amounts stated in foreign currency units and U.S. dollar equivalents. This covers all foreign currencies in which the U.S. Government has an interest, including receipts and disbursements, accrued revenues and expenditures, authorizations, obligations, receivables and payables, refunds, and similar reverse transaction items. Exceptions to using the reporting rates as shown in the report are collections and refunds to be valued at specified rates set by international agreements, conversions of one foreign currency into another, foreign currencies sold for dollars, and other types of transactions affecting dollar appropriations. (See Volume I Treasury Financial Manual 2-3200 for further details). This quarterly report reflects exchange rates at which the U.S. Government can acquire foreign currencies for official expenditures as reported by disbursing officers for each post on the last business day of the month prior to the date of the published report. Example: The quarterly report as of December 31, will reflect exchange rates reported by disbursing offices as of November 30.
    [Show full text]
  • Monetary and Fiscal Policy Interaction in A
    ARTICLES MONETARY AND FISCAL POLICY INTERACTIONS IN A MONETARY UNION In EMU, responsibility for monetary policy is assigned to the ECB, while fi scal policy remains the remit of each individual EU Member State. The Treaty on the Functioning of the European Union (hereinafter referred to as the “Treaty”), as well as additional provisions on monetary and fi scal policy interactions, aim to safeguard the value of the single currency and lay down requirements for national fi scal policies. The fi nancial crisis has highlighted that threats to fi nancial stability can have a tremendous infl uence on both monetary policy and fi scal policy. In particular, fi nancial instability and weak public fi nances can have a negative impact on each other. This adverse fi nancial-fi scal feedback loop poses severe challenges to monetary policy, as volatile and illiquid sovereign bond markets, as well as a struggling banking system, put the smooth functioning of the monetary policy transmission mechanism at risk. In order to counter the adverse impact of fi scal and fi nancial instability on the monetary policy transmission mechanism, the Eurosystem resorted to a set of non-standard monetary policy measures during the crisis. Several weaknesses in the national fi scal policies and economic governance of EMU have come to light in the course of the crisis. First, the incentives and rules for sound fi scal, fi nancial stability and macroeconomic policies proved to be insuffi cient. Second, the absence of a framework for the prevention, identifi cation and correction of macroeconomic imbalances was a clear fl aw in the EMU framework.
    [Show full text]
  • Europe Without the EU? by Filippo L
    Europe without the EU? by Filippo L. Calciano1, Paolo Paesani2 and Gustavo Piga3 Policy Brief 1 Introduction The aim of this paper is to conduct a simple albeit daring exercise in counterfactual history: we discuss what the consequences for European countries would be, in the midst of the current economic crisis, if the European Union did not exist. The EU is both a monetary union and a political and institutional union, and in this study we consider both aspects. As a monetary union, the EU manages the common currency, the euro, through the actions of the European Central Bank (ECB). As a political union the EU serves many purposes, the most important of which, with respect to the current economic crisis, is to provide a privileged forum to coordinate Member States’ anti-crisis policies. As a matter of fact, since the beginning of the cr isis, European leaders have held numerous European Council meetings as well as preparatory G-8 and G-20 meetings, confirming the urgent need for policy coordination and cooperation both at EU and international level. In this study we pose and answer the following two questions: 1. What would the consequences of the current crisis be for European countries if the euro had not been introduced ten years ago; that is, if European Monetary Union (EMU) had failed? 1 CORE, Université Catholique de Louvain-la-Neuve, and Department of Economics, University of Rome 3, email: fi[email protected]. 2 Department of Economics, University of Rome 2, email: [email protected]. 3 Department of Economics, University of Rome 2, corresponding author, email: [email protected].
    [Show full text]
  • The Economic and Monetary Union: Past, Present and Future
    CASE Reports The Economic and Monetary Union: Past, Present and Future Marek Dabrowski No. 497 (2019) This article is based on a policy contribution prepared for the Committee on Economic and Monetary Affairs of the European Parliament (ECON) as an input for the Monetary Dialogue of 28 January 2019 between ECON and the President of the ECB (http://www.europarl.europa.eu/committees/en/econ/monetary-dialogue.html). Copyright remains with the European Parliament at all times. “CASE Reports” is a continuation of “CASE Network Studies & Analyses” series. Keywords: European Union, Economic and Monetary Union, common currency area, monetary policy, fiscal policy JEL codes: E58, E62, E63, F33, F45, H62, H63 © CASE – Center for Social and Economic Research, Warsaw, 2019 DTP: Tandem Studio EAN: 9788371786808 Publisher: CASE – Center for Social and Economic Research al. Jana Pawła II 61, office 212, 01-031 Warsaw, Poland tel.: (+48) 22 206 29 00, fax: (+48) 22 206 29 01 e-mail: [email protected] http://www.case-researc.eu Contents List of Figures 4 List of Tables 5 List of Abbreviations 6 Author 7 Abstract 8 Executive Summary 9 1. Introduction 11 2. History of the common currency project and its implementation 13 2.1. Historical and theoretic background 13 2.2. From the Werner Report to the Maastricht Treaty (1969–1992) 15 2.3. Preparation phase (1993–1998) 16 2.4. The first decade (1999–2008) 17 2.5. The second decade (2009–2018) 19 3. EA performance in its first twenty years 22 3.1. Inflation, exchange rate and the share in global official reserves 22 3.2.
    [Show full text]
  • 'The Birth of the Euro' from <I>EUROPE</I> (December 2001
    'The birth of the euro' from EUROPE (December 2001-January 2002) Caption: On the eve of the entry into circulation of euro notes and coins on January 1, 2002, the author of the article relates the history of the single currency's birth. Source: EUROPE. Magazine of the European Union. Dir. of publ. Hélin, Willy ; REditor Guttman, Robert J. December 2001/January 2002, No 412. Washington DC: Delegation of the European Commission to the United States. ISSN 0191- 4545. Copyright: (c) EUROPE Magazine, all rights reserved The magazine encourages reproduction of its contents, but any such reproduction without permission is prohibited. URL: http://www.cvce.eu/obj/the_birth_of_the_euro_from_europe_december_2001_january_2002-en-fe85d070-dd8b- 4985-bb6f-d64a39f653ba.html Publication date: 01/10/2012 1 / 5 01/10/2012 The birth of the euro By Lionel Barber On January 1, 2002, more than 300 million European citizens will see the euro turn from a virtual currency into reality. The entry into circulation of euro notes and coins means that European Monetary Union (EMU), a project devised by Europe’s political elite over more than a generation, has finally come down to the street. The psychological and economic consequences of the launch of Europe’s single currency will be far- reaching. It will mark the final break from national currencies, promising a cultural revolution built on stable prices, enduring fiscal discipline, and lower interest rates. The origins of the euro go back to the late 1960s, when the Europeans were searching for a response to the upheaval in the Bretton Woods system, in which the US dollar was the dominant currency.
    [Show full text]
  • Problems the Adoption of the EURO in Lithuania
    Problems the adoption of the EURO in Lithuania Rima AUGULYT ö – Václav DUFALA Introduction The Euro zone (also called Euro Area , Euro system or Euro land ) is the subset of European Union member states which have adopted the euro, creating a currency union. The euro has replaced the former national currencies. The single currency was introduced on 1 January 1999, but existed in the first three years only as electronic money. On 1 January 2002 euro banknotes and coins were put into circulation in the euro area member states, and the central banks began to withdraw the national banknotes and coins. As from 1 March 2002 the euro is the only legal tender in the euro area member states. Thirteen euro area member states have a single currency, a common interest rate and a common central bank. The European Central Bank is responsible for monetary policy within the zone. 1. Official members In 1998 eleven EU member-states had met the convergence criteria, and the Euro zone came into existence with the official launch of the euro on 1 January 1999. Greece qualified in 2000 and was admitted on 1 January 2001. Physical coins and banknotes were introduced on 1 January 2002. Slovenia qualified in 2006 and was admitted on 1 January 2007 bringing total Euro zone membership to its current level of over 316 million people and thirteen member states. 1.1. Non-member states with formal euro agreements Monaco, San Marino and Vatican City also use the euro, although they are officially neither euro members nor members of the EU.
    [Show full text]