EUROPEAN COMMON CURRENCY OUTSIDE EURO ZONE AND FIXED EXCHANGE RATES VS. EURO: ECONOMIC AND LEGAL ASPECTS

Abstract

On January 1, 1999, the euro came into existence as a European common currency (currency of Economic and Monetary Union). Additionally, euro has become a legal tender in states and countries outside euro zone. In Europe,  San Marino, the Vatican, Monaco and Andorra have adopted euro. With the introduction of the euro, it was necessary to redefine monetary relations with these countries which had no national currency but which used the former national currencies of Member States of the euro zone. Euro has become a legal tender also in French overseas department and territories which formerly used French francs: Mayotte, Saint Pierre and Miquelon, Martinique, French Guiana, Reunion, and Guadeloupe on the basis of a decision of the Council or as integral part of France. Also parts of Balkans, where the Deutschmark has been used as the official currency – Kosovo and Montenegro, on January 1, 2002 also introduced euro, however based on internal decisions, not on agreement with the EU. They can use euro, but they are not allowed to issue banknotes and coins. Consequently, creation of the euro has launched process of euroization – adopting euro as own legal tender outside euro zone.  Moreover, a number of states and countries, which currency was pegged at a fixed rate to the French franc, Portuguese escudo or Deutschemark, decided to introduce fixed peg arrangements against euro.