The euro is the official currency of the eurozone, a monetary union of European Union (EU) member states. While all EU countries are part of the Economic and Monetary Union (EMU) and coordinate their economic policies, not all have adopted the euro. The eurozone represents those nations that have taken the further step of replacing their national currencies with the euro, creating a single currency area within Europe.
Introduced initially as ‘book money’ in 1999, the euro physically entered circulation with coins and banknotes in 2002. At its inception, the eurozone comprised 11 of the then 15 EU member states. Over time, the eurozone has expanded. Greece joined in 2001, followed by Slovenia in 2007. Cyprus and Malta adopted the euro in 2008, with Slovakia joining in 2009. Estonia, Latvia, and Lithuania further enlarged the euro area in 2011, 2014, and 2015 respectively. Most recently, Croatia became the 20th member of the eurozone in 2023.
However, not all EU member states are part of the eurozone. Denmark, for instance, has a formal ‘opt-out’ agreement, allowing it to remain outside the euro should it choose. Sweden, while not having an opt-out, has not yet met the necessary economic criteria to join the euro area.
The remaining EU members not in the eurozone are primarily those that joined the Union in or after 2004. Upon their accession, these countries had not yet fulfilled the conditions required for euro adoption. Nevertheless, they are committed to joining the eurozone once they satisfy these criteria, holding a ‘derogation’ status similar to Sweden.
Interestingly, euro adoption extends beyond EU borders. Andorra, Monaco, San Marino, and Vatican City, although not EU member states, have adopted the euro as their national currency. This is facilitated through specific monetary agreements with the EU, which also permit them to issue their own euro coins within defined limits. Despite using the euro, these countries are not formally part of the eurozone, which remains an entity exclusively composed of EU member states.
