The euro explained: its history and the 21 euro area countries

The euro is the currency of 21 European Union countries and the second most traded currency in the world after the US dollar. In April 2025, the euro was on one side of 28.9% of all foreign exchange trades, according to the Bank for International Settlements.

How the euro began

• 1 January 1999: the euro was introduced in 11 countries for electronic payments and financial markets, and the European Central Bank took over monetary policy for the group.
• 2001: Greece joined.
• 1 January 2002: euro banknotes and coins entered circulation, replacing national currencies such as the Deutsche Mark, the French franc and the Italian lira.

The original 11 were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

How the euro area grew

After Greece, the euro area expanded to Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014), Lithuania (2015) and Croatia (2023). Bulgaria became the 21st member on 1 January 2026, with a conversion rate of 1.95583 levs per euro. The ECB says the euro is now shared by 358 million Europeans.

How a country joins

EU members that meet the convergence criteria can adopt the euro. The criteria cover inflation, public finances, long-term interest rates and exchange rate stability, which normally means at least two years in the Exchange Rate Mechanism II (ERM II) without severe tensions. Denmark has an opt-out and keeps the krone in ERM II. Other EU members outside the euro area are committed under the EU treaties to adopt it once they meet the criteria, with no fixed deadline.

One currency, one interest rate

The ECB sets a single monetary policy for all members, which is why euro area inflation and growth figures move the euro as a whole. Its main policy rate is the deposit facility rate, raised to 2.50% on 10 September 2026 (report). The ECB aims for inflation of 2% over the medium term (inflation targets).

A single interest rate can suit some members better than others at any given time, a tension that became acute during the euro area debt crisis of 2010 to 2012.

Why it matters for traders

• The euro dominates the US Dollar Index, making up 57.6% of the basket (DXY explained).
• Euro area releases from Eurostat, such as the inflation flash estimate and GDP, usually carry more weight than individual country data, though German figures still move the market.
• Crosses such as EUR/GBP, EUR/JPY and EUR/CHF let traders separate euro moves from dollar moves (cross rates).

Live prices: EUR/USD.