How the Euro Works

The original seed was planted in 1946 when Winston Churchill suggested the creation of the "United States of Europe." His goals were primarily political, in that he hoped a unified government would bring about peace for a continent that had been torn apart by two world wars.

Then, in 1952, six west-European countries took Churchill's suggestion and created the European Coal and Steel Community (ECSC). These resources were quite strategic to the power of each country, so a requirement of the ECSC was that each country allow their resources to be controlled by an independent authority. Their goal, just as Churchill had intended, was to help prevent military conflict between France and Germany.

In 1957, the Treaty of Rome was signed, declaring the goal of creating a common European market. It was signed by France, Germany, Italy, Belgium, the Netherlands, and Luxembourg.

After many false starts, the process of creating the Euro got its real start in 1989, when the Delors Report was published by Jacques Delors, president of the European Commission. This important report outlined a three-stage transition plan that would create a single European currency. In the next section, we'll look at the stages.