Euro Conversion

Exchange Rate Mechanism (ERM)

The ERM links currencies of non-participating countries to the euro as of January 1, 1999, as they stood on the first day of stage three of the changeover. It uses fluctuations of plus or minus 15 percent as the basic rule.

European Currency Unit (ECU)

This refers to the basket currency that was made up of the weighted value of each of the 12 member states' national currencies as of the signing of the Maastricht Treaty in February 1992. The ECU was replaced by the euro on January 1, 1999. The initial value of the euro was 1-to-1 with the ECU.

Setting the Value of the Euro

The European Central Bank (ECB) was established in 1998. Its job is to make sure that the European System of Central Banks (ESCB) implemented the changeover required by the euro statutes and generally carries out its duties. The General Council of the ECB was responsible for setting the conversion rate for the euro for each participating country. Those rates were established in January 1999, and are "irrevocably fixed." The conversion was based on the existing currency so that the euro is simply an expression of the previous national currency.

The ECB used guidelines established in a Joint Communique that was issued on May 2, 1998, by the ministers of the member states who were adopting the euro. In order not to modify the external value of the European Currency Unit (ECU), they used the bilateral rates of the Exchange Rate Mechanism (ERM) to establish the fixed conversion rate for each national currency. The calculation of the exchange rates followed the regular daily concertation procedure, which used the representative exchange rate for each nation's currency against the U.S. dollar as of December 31, 1998.

Here are the established values. One euro equals:

  • 40.3399 Belgian franc
  • 340.750 Greek drachma
  • 6.55957 French franc
  • 1936.27 Italian lira
  • 2.20371 Dutch guilder
  • 200.482 Portuguese escudo
  • 1.95583 Deutsche mark
  • 166.386 Spanish peseta
  • 0.787564 Irish punt
  • 40.3399 Luxembourg franc
  • 13.7603 Austrian schilling
  • 5.94573 Finnish markka