The euro is the single currency of 16 of the 27 member states of the European Union (EU) - those 16 are also called the euro area - and was first launched in 1999 with 11 members. The original members were Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria , Portugal and Finland. Countries that joined later were Greece, Slovenia, Cyprus, Malta and Slovakia.
The euro is monetarily administered by the European Central Bank (ECB), which recently announced that the wider euro-area economy is officially in recession although the ECB raised interest rates in mid-2008.
The euro was introduced in January 1999 as a kind of virtual currency for cashless payments, eventually replacing the cash currencies of its 12 member states in 2002. Most recently, Cyprus and Malta replaced their currencies with the euro in 2008 while Slovenia did so in 2007. The ECB can only influence the euro's value through monetary policy like adjusting interest rates - fiscal policies like taxation and government spending are still left to the euro's member nations.
The euro-area economy suffered its first recession since the single currency with gross domestic product (GDP) sinking by 0.2 percent for a third straight quarter in Q3 2008. Critics said the ECB had been inflexible on monetary policy over the euro, exacerbating the downturn. The euro recently traded at US$1.26 after hitting $US1.60 in mid-2008 and continues to decline steadily in value vs. the greenback.
In May of 2010, the European Union spearheaded a $1 trillion plan to contain Europe's spreading debt crisis and keep it from tearing the euro currency apart and derailing the global economic recovery. The European Central Bank used what analysts called its "nuclear option" - buying public and private debt to shore up liquidity in "dysfunctional" markets and lower borrowing costs. The U.S. Federal Reserve separately reopened a currency swap program to ship billions of dollars overseas, pumping more short-term cash into the financial system.
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