European Currency Unit

European Currency Unit
ISO 4217
Code XEU
Number 954
Denominations
Plural usually ECUs
Symbol ? (rare), ECU or XEU
Demographics
Date of introduction 13 March 1979
Replaced European Unit of Account
Date of withdrawal 1 January 1999
Replaced by Euro
User(s) European Union European Economic Community
European Union European Union
Valuation
Pegged with 8 to 12 EEC currencies, proportionally (see article)
Value 1 XEU = 1 EUR
This infobox shows the latest status before this currency was rendered obsolete.
Part of a series on the
History of the
European Union
Flag of Europe.svg
Flag of Europe.svg European Union portal

The European Currency Unit (? or ECU, French pronunciation: ​[eky]) was a basket of the currencies of the European Community member states, used as the unit of account of the European Community before being replaced by the euro on 1 January 1999, at parity. The ECU itself replaced the European Unit of Account, also at parity, on 13 March 1979. The European Exchange Rate Mechanism attempted to minimize fluctuations between member state currencies and the ECU. The ECU was also used in some international financial transactions, where its advantage was that securities denominated in ECUs provided investors with the opportunity for foreign diversification without reliance on the currency of a single country.[1]

The ECU was conceived on 13 March 1979 as an internal accounting unit. It had the ISO 4217 currency code XEU.

Euro replaces ECU

On 1 January 1999, the euro (with the code EUR and symbol EUR) replaced the ECU, at the value EUR1 = 1 ECU. Unlike the ECU, the euro is a real currency, although not all member states participate (for details on euro membership see Eurozone). Two of the countries in the ECU basket of currencies, UK and Denmark, did not join the eurozone, and a third, Greece, joined late. On the other hand, Finland and Austria 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 that states determine their currencies, and that therefore states would accept the European Union legislation to that effect. However, for abundant caution, several foreign jurisdictions adopted legislation to ensure a smooth transition. Of particular importance, the U.S. states of Illinois and New York adopted legislation to ensure a large proportion of international financial contracts recognized the euro as the successor of the ECU.[]

Etymology

Although the acronym ECU is formed from English words, écu is also the name of an ancient French coin. That was one reason that a new name was devised for its successor currency, euro, which was felt not to favour any single language.[2]

Symbol

The currency's symbol, ? (U+20A0), comprises an interlaced C and E, which are the initial letters of the phrase 'European Community' in many European languages. However, this symbol was not widely used: few systems at the time could render it and in any case banks preferred (as with all currencies) to use the ISO code XEU.

Coins and notes

As the ECU was only an electronic unit of account and not a full currency, it did not have any official coins or notes that could be used for everyday transactions. However, various European countries and organisations like the European Parliament made commemorative and mock-up coins and notes. A common theme on the coins was usually celebrating European unity, such as celebrating membership of the European Union. In 1989, the government of the Netherlands issued a series of ECU coins from ?2½ to ?200, which could be spent in shops in The Hague, during the European Capital of Culture festival. Gibraltar issued commemorative coins from 1993 through 1996.[3]

Value determined by basket of currencies

Approximate national currency weights to the ECU value
Currency 1979-03-13-
1984-09-16
1984-09-17-
1989-09-21
1989-09-21-
1998-12-31
Belgium Belgian franc (BEF) 9.64% 8.57% 8.18%
Germany German mark (DEM) 32.98% 32.08% 31.96%
Denmark Danish krone (DKK) 3.06% 2.69% 2.65%
Spain Spanish peseta (ESP) - - 4.14%
France French franc (FRF) 19.83% 19.06% 20.32%
United Kingdom Pound sterling (GBP) 13.34% 14.98% 12.45%
Greece Greek drachma (GRD) - 1.31% 0.44%
Republic of Ireland Irish pound (IEP) 1.15% 1.20% 1.09%
Italy Italian lira (ITL) 9.49% 9.98% 7.84%
Luxembourg Luxembourgish franc (LUF) - - 0.32%
Netherlands Dutch guilder (NLG) 10.51% 10.13% 9.98%
Portugal Portuguese escudo (PTE) - - 0.7%

See also

References

  1. ^ David L. Scott, Wall Street Words (3rd ed. 2003), p. 130.
  2. ^ Ungerer, Horst (1997). A Concise History of European Monetary Integration: From EPU to EMU. Westport, Conn: Quorum Books. p. 286. ISBN 089930981X. Retrieved 2016. 
  3. ^ "Gibraltar coins" (PDF). Retrieved . 

External links


  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.

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