The European Currency Unit (, ; , ECU, or XEU) was a
unit of account
In economics, unit of account is one of the money functions. A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of rela ...
used by the
European Economic Community
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisb ...
and composed of a basket of member country currencies. The ECU came in to operation on 13 March 1979 and was assigned the
ISO 4217 code.
The ECU replaced the
European Unit of Account The European Unit of Account (EUA) was a unit of account most notably used in the European Communities from 1975 to 1979, when it was replaced at parity by the European Currency Unit, in turn replaced at parity in 1999 by the euro.
The EUA was intr ...
(EUA) at parity in 1979, and it was later replaced by the
euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
(EUR) at parity on 1 January 1999.
As a unit of account, the ECU was not a circulating currency and did not replace or override the value of the currency of EEC member countries. However, it was used to price some international financial transactions and capital transfers.
Exchange rate
Using a mechanism known as the "
snake in the tunnel
The snake in the tunnel was a system of European monetary cooperation in the 1970s which aimed at limiting fluctuations between different European currencies. It was the first attempt at European monetary cooperation. It attempted to create a sing ...
", the
European Exchange Rate Mechanism
The European Exchange Rate Mechanism (ERM II) is a system introduced by the European Economic Community on 1 January 1999 alongside the introduction of a single currency, the euro (replacing ERM 1 and the euro's predecessor, the ECU) as ...
was an attempt to minimize fluctuations between member state currencies—initially by managing the variance of each against its respective ECU reference rate—with the aim to achieve fixed ratios over time, and so enable the European Single Currency (which became known as the euro) to replace national currencies.
Hard ECU proposal
In 1990 the British
Chancellor of the Exchequer
The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of His Majesty's Treasury. As one of the four Great Offices of State, the Chancellor is ...
proposed the creation of a 'hard' ECU, which different national currencies could compete against and, if the ECU was successful, could lead to a single currency.
The move was seen by France and Germany as a wrecking tactic, especially when the increasingly Euro-sceptic Thatcher announced her outright opposition to European Economic and Monetary Union (EMU), and the idea was abandoned.
Euro replaces the ECU
On 1 January 1999, the euro (with the code EUR and symbol
€
The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists ...
) replaced the ECU, at the value €1 = 1 ECU.
Unlike the ECU, the euro is a real currency, although not all member states participate (for details on euro membership see
Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU policies ...
). Two of the countries in the ECU basket of currencies, UK and
Denmark
)
, song = ( en, "King Christian stood by the lofty mast")
, song_type = National and royal anthem
, image_map = EU-Denmark.svg
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Danish Realm, Kingdom of Denmark
...
, did not join the eurozone, and a third,
Greece
Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders with ...
, joined late. On the other hand,
Finland
Finland ( fi, Suomi ; sv, Finland ), officially the Republic of Finland (; ), is a Nordic country in Northern Europe. It shares land borders with Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of B ...
and
Austria
Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
joined the eurozone from the beginning although their currencies were not part of the ECU basket (since they had joined the EU in 1995, two years after the ECU composition was "frozen")
Legal implications
Due to the ECU being used in some international financial transactions, there was a concern that foreign courts might not recognize the euro as the legal successor to the ECU. This was unlikely to be a problem, since it is a generally accepted principle of
private international law
Conflict of laws (also called private international law) is the set of rules or laws a jurisdiction applies to a case, transaction, or other occurrence that has connections to more than one jurisdiction. This body of law deals with three broad t ...
that states determine their currencies, and that therefore states would accept the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
legislation to that effect. However, for abundant caution, several foreign jurisdictions adopted legislation to ensure a smooth transition. Of particular importance, the
U.S. state
In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its sover ...
s of
Illinois
Illinois ( ) is a U.S. state, state in the Midwestern United States, Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolita ...
and
New York adopted legislation to ensure a large proportion of international financial contracts recognized the euro as the successor of the ECU.
Symbol and name
The ECU's symbol, ₠, consists of an interlaced ''C'' and ''E''—the initials of "
European Community
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...
" in many
languages of Europe
Most languages of Europe belong to the Indo-European language family. Out of a total European population of 744 million as of 2018, some 94% are native speakers of an Indo-European language. Within Indo-European, the three largest phyla are Rom ...
. However, the symbol was not widely adopted. Few computer systems utilized by financial institutions and governments could render it, and commercial payment systems were obliged to use the ISO code, XEU, as with other currencies without widely recognised currency symbols. The
Unicode
Unicode, formally The Unicode Standard,The formal version reference is is an information technology Technical standard, standard for the consistent character encoding, encoding, representation, and handling of Character (computing), text expre ...
designation for the ECU symbol () was not implemented on many personal computer operating systems until the release of Unicode v1.1 in May 1998, which also introduced the
euro sign
The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists ...
().
Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
did include the ECU symbol in many of its European versions of
Windows
Windows is a group of several proprietary graphical operating system families developed and marketed by Microsoft. Each family caters to a certain sector of the computing industry. For example, Windows NT for consumers, Windows Server for serv ...
beginning in the early-90s, however, accessing it required the use of an
Alt code, and not all typefaces provided a glyph. By 2009, Microsoft referred to the ECU symbol as "historical". Support among other operating systems, including
Macintosh operating systems, was inconsistent.
Although the acronym for ECU is formed from the English name of the unit,
écu
The term ''écu'' () or crown may refer to one of several French coins. The first ''écu'' was a gold coin (the ''écu d'or'') minted during the reign of Louis IX of France, in 1266. ''Écu'' (from Latin ''scutum'') means shield, and the coin ...
was a family of gold coins minted during the reign
Louis IX of France
Louis IX (25 April 1214 – 25 August 1270), commonly known as Saint Louis or Louis the Saint, was King of France from 1226 to 1270, and the most illustrious of the Direct Capetians. He was crowned in Reims at the age of 12, following the ...
. The name of ECU's successor, the
euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
, was chosen because the name did not favor any single language, nation, or historical period.
Coins and notes
As the ECU was only an electronic unit of account and not a full currency, it did not have any official
coin
A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s or
note
Note, notes, or NOTE may refer to:
Music and entertainment
* Musical note, a pitched sound (or a symbol for a sound) in music
* ''Notes'' (album), a 1987 album by Paul Bley and Paul Motian
* ''Notes'', a common (yet unofficial) shortened version ...
s that could be used for everyday transactions. However, various European countries and organizations like the
European Parliament
The European Parliament (EP) is one of the legislative bodies of the European Union and one of its seven institutions. Together with the Council of the European Union (known as the Council and informally as the Council of Ministers), it adopts ...
made
commemorative and
mock-up
In manufacturing and design, a mockup, or mock-up, is a scale or full-size model of a design or device, used for teaching, demonstration, design evaluation, promotion, and other purposes. A mockup may be a ''prototype'' if it provides at lea ...
coins and notes. A common theme on the coins was usually celebrating
European unity
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
, such as celebrating membership of the European Union.
Gibraltar
)
, anthem = " God Save the King"
, song = " Gibraltar Anthem"
, image_map = Gibraltar location in Europe.svg
, map_alt = Location of Gibraltar in Europe
, map_caption = United Kingdom shown in pale green
, mapsize =
, image_map2 = Gib ...
issued commemorative coins from 1993 through 1996,
though these were (nominally)
legal tender
Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...
only in Gibraltar, which uses the
pound sterling
Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and t ...
.
Currency basket
See also
*
Asian Monetary Unit
The Asian Monetary Unit (AMU) is a basket of currencies proposed by the Japanese government's Research Institute of Economy, Trade and Industry ( RIETI). It is similar to and modeled on the European Currency Unit (ECU), predecessor to the euro.
...
*
Eco (currency)
The eco is the name for the proposed common currency of the Economic Community of West African States (ECOWAS). Plans originally called for the West African Monetary Zone (WAMZ) states to introduce the currency first, which would eventually be m ...
*
Green pound
*
World currency unit
There are two different types of world currency unit in use today that have different origins and usages.
History
The WCU was proposed by Lok Sang Ho of Lingnan University, Hong Kong. The WCU was first intended to be the basis for denominating ...
References
External links
Economic and Monetary Unionat the
European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#Intern ...
{{Authority control
Currencies of Europe
Eurozone
Currency symbols