Germany in Europe

Eurozone

For more than a decade, the single currency has reduced exchange costs and the exchange rate risk for businesses in Europe. On January 1, 1999 twelve member states of the European Union introduced the Eurosystem to form the economic and monetary union that was provided for in the Maastricht Treaty. Exchange rates among the participating countries were fixed. Three years later, in January 2002, common Euro coins and banknotes were introduced as the final physical form of the common currency.

The convergence criteria of the Stability and Growth Pact and the European Central Bank ensured fiscal discipline throughout the Eurozone und laid the foundation for its financial stability. Even throughout the current financial crisis, the Euro has proved its ability to strengthen the financial system of the Monetary Union. Due to its stability, the Euro has become the second most important reserve currency in the world after the dollar.

Because of its success, the Eurosystem has since expanded to include 16 countries, namely Germany, Belgium, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Finland, Slovenia, Cyprus, Malta and Slovakia. Thus, for trade and travel within these countries currency exchange is no longer necessary.

In addition, the Single European Payment Area (SEPA) is intended to make electronic payments across the euro area as easy as domestic payments. In the past, credit card payments, direct debits and bank transfers were mainly regulated at the national level, even after the introduction of the Euro. SEPA removes these barriers by standardizing the national systems of cashless payment and by introducing equal fees for all Euro countries. SEPA is an initiative of the European banking industry which is strongly supported by the European Central Bank and the EU Commission