The euro was launched on 1 January 1999, when it became the currency of more than 300 million people in Europe. For the first three years it was an invisible currency, only used for accounting purposes, e.g. in electronic payments. Euro cash was not introduced until 1 January 2002, when it replaced, at fixed conversion rates, the banknotes and coins of the national currencies like the Belgian franc and the Deutsche Mark.
Today, euro banknotes and coins are legal tender in 17 of the 27 Member States of the European Union, including the overseas departments, territories and islands which are either part of, or associated with, euro area countries. These countries form the euro area. The micro-states of Monaco, San Marino and Vatican City also use the euro, on the basis of a formal arrangement with the European Community. Andorra, Montenegro and Kosovo likewise use the euro, but without a formal arrangement.
|1||BEF 40.3399 (Belgian francs)|
|1||DEM 1.95583 (Deutsche Mark)|
|1||EEK 15.6466 (Estonian kroon)|
|1||IEP 0.787564 (Irish pound)|
|1||GRD 340.750 (Greek drachmas)|
|1||ESP 166.386 (Spanish pesetas)|
|1||CYP 0.585274 (Cyprus pound)|
|1||FRF 6.55957 (French francs)|
|1||ITL 1936.27 (Italian lire)|
|1||LUF 40.3399 (Luxembourg francs)|
|1||MTL 0.429300 (Maltese lira)|
|1||NLG 2.20371 (Dutch guilders)|
|1||ATS 13.7603 (Austrian schillings)|
|1||PTE 200.482 (Portuguese escudos)|
|1||SIT 239.640 (Slovenian tolars)|
|1||SKK 30.1260 (Slovak koruna)|
|1||FIM 5.94573 (Finnish markkas)|
Euro banknotes (and coins) circulate widely in the euro area mainly because of tourism, business travel and cross-border shopping. To a much more limited extent, national banknotes, before the introduction of the euro, also “moved” across borders and then had to be “repatriated”, mainly through the commercial banking system, to the central bank that issued them. Such returns are not necessary with the euro. However, since large quantities of euro banknotes do not remain in the country where they were issued but are taken to other euro countries, and spent there, the central banks have to redistribute them in order to avoid a banknote shortage in one country and a surplus in another. These bulk transfers are coordinated centrally and financed by the ECB.
Since the introduction of euro cash in 2002, the value and the number of euro banknotes in circulation have risen steadily. Cash is by far the most widely used means of payment for retail transactions in the euro area in terms of the number of transactions, although in terms of value it has a significantly smaller share. In both respects, however, the role of cash has been gradually declining in recent decades, while the use of debit and credit cards has been growing, a trend that is expected to continue.
As a payment instrument, cash has some unique features:
In view of these features, society is not ready to do without cash. Cash will remain indispensable as a payment instrument for many years to come.
One of the basic tasks of the Eurosystem under the Treaty on the Functioning of the EU is to promote the smooth operation of the payment system. The Eurosystem is neutral with regard to the different payment instruments. It does not favour one instrument over another. However, the Eurosystem central banks have a special responsibility for cash, as they are the official issuers of euro banknotes. In addition, most of them put into circulation the euro coins, which are issued by the Member States. Therefore, the Eurosystem is committed to supporting cash as a generally available, easy-to-use, reliable and efficient means of payment for retail transactions. Within its sphere of competence, the Eurosystem monitors and continuously seeks to promote the safety, resilience and efficiency of the euro area cash cycles.
In April 2001 the ECB’s Governing Council decided that the production of euro banknotes should be decentralised and pooled after the initial cash changeover. Therefore, since 2002 each national central bank of the euro area has been allocated a share of the total annual production of euro banknotes in respect of certain denominations. The respective bank bears the production costs for the share allocated.
In September 2002 the Governing Council decided to establish a Eurosystem Strategic Stock (ESS). This stock is intended for use in exceptional circumstances, i.e. when logistical stocks in the Eurosystem are insufficient to cover an unexpected increase in the demand for banknotes or in the event of a sudden interruption in supply.
The logistical and strategic stocks ensure that any changes in demand for banknotes can be handled at any time by the national central banks, irrespective of whether the demand comes from inside or outside the euro area. The logistical stocks meet the demand for banknotes in normal circumstances in order to
For details, see the Legal framework, pdf 100 kB, en .
Preparations are under way for the second series of euro banknotes. They will include security features that are easy to spot and difficult to counterfeit, as in the current series, but will be more sophisticated in order to keep ahead of the printing and image reproduction technology now available to counterfeiters.
The plan is to introduce the first denomination of the second series in the next few years. The others will follow at intervals and ultimately replace the existing series. The new banknotes will continue to include the "ages and styles of Europe" design elements, enabling people to recognise them easily.
Legally, both the ECB and the central banks of the euro area countries have the right to issue euro banknotes. In practice, only the national central banks physically issue and withdraw euro banknotes (as well as coins). The ECB does not have a cash office and is not involved in any cash operations. As for euro coins, the legal issuers are the euro area countries. The European Commission coordinates all coin matters at euro area level. For further information, see the European Commission’s website.
The ECB is responsible for overseeing the activities of the national central banks (NCBs) and for initiating further harmonisation of cash services within the euro area, while the NCBs are responsible for the functioning of their national cash-distribution systems. The NCBs put banknotes and coins into circulation via the banking system and, to a lesser extent, via the retail trade. The ECB cannot perform these operations as it does not have its own technical departments (distribution units, banknote processing units, vaults, etc.).