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How the Euro Works

        Money | Currency

Implementing the Changeover

On January 1, 1999, the euro was established as the official currency of the 12 participating member states of the European Union. The conversion rates were "irrevocably fixed," and the euro officially "existed." At that point, the euro could be used for non-cash transactions, such as making electronic payments, writing checks, or credit transactions. Although this sounds confusing, in most cases the balances were shown both in the national currency as well as in the converted euro amounts. The currency changed, but because of the established conversion rate, the value remained the same.

The euro currency was introduced on January 1, 2002. Some countries had slightly different schedules for the end of circulation of their existing national currency. This is the schedule for the euro introduction and endings for national currencies:

  • December 31, 2001 was the last day for electronic payments in the old currencies.
  • December 31, 2001 was the last day that the German mark could be legal tender; however, cash was accepted until February 28, 2002.
  • January 28, 2002 was the last day for the Dutch guilder.
  • February 9, 2002 was the last day for the Irish punt.
  • February 17, 2002 was the last day for the French franc.
  • February 28, 2002 was the last day for all other national currencies, including the Belgian franc, Luxembourg franc, Italian lira, Greek drachma, Finnish markka, Spanish peseta, Portuguese escudo, and Austrian schilling.

When items were purchased with national currency, the change was given in euros. Exchange of cash was also done in banks. Automated teller machines (ATMs) began distributing only euros on January 1, 2002. During the "dual circulation period," until the final deadlines were reached for changeover, both national currencies and the euro were accepted, but after that point only the euro was acceptable legal tender. Banks will still be able to exchange old currency for new currency until approximately 2012.