19 of the EU's 27 member states use the euro as their official currency (EU). As of 2019, there are over 340 million inhabitants living within the so-called eurozone, also known as the euro region, which is a collection of states. One euro is equal to one hundred cents.
Along with the four European microstates that are not EU members, the British Overseas Territories of Akrotiri and Dhekelia, as well as Montenegro and Kosovo unilaterally, the currency is also used by the institutions of the European Union. Numerous exclusive areas of EU members also use the euro as their currency outside of Europe. Additionally, the euro is the currency used by more than 200 million people worldwide.
After the US dollar, the euro is the second-largest reserve currency and the second-most traded currency in the world as of 2013. The cumulative value of banknotes and coins in circulation for the euro as of December 2019 was over €1.3 trillion, making it one of the largest values in the world.
On 16 December 1995 in Madrid, the name "euro" was formally accepted. The euro was launched to the international financial markets on 1 January 1999 as an accounting currency, replacing the previous "European Currency Unit" (ECU) at a ratio of 1:1 (US$1.1743). The euro became the daily working currency of its founding members on January 1, 2002, when physical coins and banknotes went into circulation. By March 2002, it had totally supplanted the prior currencies.
The euro fluctuated below the US dollar between December 1999 and December 2002 but has since risen to or above the US dollar, reaching a high of US$1.60 on July 18, 2008, and since then, recovering to a level close to its initial issuance rate. Due in part to the 2022 Russian invasion of Ukraine, the two currencies reached parity on July 13 of that year for the first time in almost two decades.
It has been discovered that the introduction of the euro created "significant reductions in market risk risk exposures for nonfinancial firms both in and outside Europe." These reductions in market risk "were concentrated in firms domiciled in the eurozone and in non-euro firms with a high fraction of foreign sales or assets in Europe."
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