The Euro is the common currency in the Eurozone (a group of 15 European Union states) today. Use of the euro began in January 2002, and 12 nations switched their currency immediately to the euro. It is a currency similar to the dollar in the United States. Countries within the European Union were able to join the Common Currency if they meet 4 criteria (known as the 'convergence criteria'. These were:
1. The budget deficit must be below 3% of GDP (the difference between government receipts and expenditures.)
2. The total government debt must be below 60% of GDP.
3. The country must have an inflation rate within 1.5% of the lowest 3 inflation rates of EU countries.
4. Nominal Long-term interest rates must be within 2% of the interest rate of countries with the lowest 3 inflation rates.
In addition to these criteria a country must have 'normal' fluctuations of it's currency. (That is, within the margins allowed.) It is perhaps worth noting that countries were allowed to join the common currency if their budget deficit and total government debt were approaching the reference values at a 'satisfactory pace', not necessarily actually on them. In January 1999 the exchange rates of countries that had passed the criteria (and were not exercising an opt-out) were fixed the the Euro. The European Central Bank (ECB) came into being. Euro coins and notes were introduced to the general public on the 1st of January 2002 as legal tender, alongside national currencies. Initially in March of 1998, when the calculations as to which countries had met the convergence criteria occurred, 11 countries, Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain were admitted to join the European Monetary Union. In June of 2000 Greece was admitted. Slovenia joined in 2007, and Malta and Cyprus joined in 2008.
In the United Kingdom the currency is still the pound, but there is pressure to convert to the euro that is used throughout Europe. As of 2007 the United Kingdom and Denmark are the only European Union member countries with an 'opt-out' (allowing them to select not to join the common currency despite meeting the criteria). In addition to the four criteria of entry set out in the Maastricht Treaty the Chancellor of the Exchequer laid out 5 economic tests the United Kingdom must meet to join. (At the last report it had met 1.) Many conservatives in the UK (Tories) resist conversion to the European currency because a reliance on a common currency represents a loss in sovereignty and control. In particular, there is fear of the UK becoming dependent on the fiscal policies of the larger combination of Germany, Italy, and France.
Initially the value of the Euro fell on the exchange markets, while many expected it to do the opposite. However it has strengthened in recent times partly due to the falling value of the dollar. The ECB is charged with maintaining the inflation rate in the Eurozone between 0 and 2%.
By the end of 2006, after about five years of the euro, a French magazine Le Pèlerin reported that 52% of the French feel that the euro is a "bad thing", blaming it for price hikes and job losses. 71% of French blue-collar workers said that euro has hurt them personally. .