What Are Euro Notes?
Euro notes are legal tender in the form of a banknote that can be used in exchange for goods and services in the eurozone. Euro notes come in seven denominations: 5, 10, 20, 50, 100, 200, and 500 euro. The supply of euro notes is controlled by the European Central Bank (ECB).
- The euro started as an electronic currency until the physical notes and coins became widely adopted in 2002.
- Making purchases in physical currency is still much more widely practiced than it is in the United States, but credit card companies and mobile payment options are affecting the use of notes and coins.
- The supply and control of the physical euro banknotes are controlled by the European Central Bank, functioning in the same capacity as the Federal Reserve in the United States.
- The euro is one of the most widely traded currencies in the world.
Understanding Euro Notes
Although the euro as a currency was introduced on January 1, 1999, it was an electronic currency only for the first three years of its existence. Physical euro notes and coins began circulating in the euro area or eurozone (those countries within the European Union (EU) that have adopted the euro as their currency) on January 1, 2002.
There are seven euro banknotes and eight euro coins. The banknotes, with designs described by the ECB as "inspired by the architectural styles of seven periods in Europe’s cultural history," are identical throughout the euro area, although euro coins have one side that is country-specific.
All euro notes and coins are legal tender in any country within the eurozone, which at present represents 18 of the 27 countries of the EU. All countries in the EU with the exception of Denmark, which has opt-out clauses, are expected to join the euro area eventually.
The micro-states of Andorra, Monaco, San Marino, and Vatican City also use the euro, as part of a formal arrangement with the European Community. This means that currently, euro notes and coins are circulating in countries with a total population of 340 million people. Following global trends, however, the share of physical cash in transactions has been declining steadily as debit and credit card usage grows. Cash is still popular for smaller transactions but less so for larger ones.
Actual issuance of notes and coins takes place within the Eurosystem, which is the monetary authority of the eurozone—comprising the ECB and the national central banks of the 19 current eurozone members. Each national central bank within the Eurosystem is an official issuer of euro notes, and prints (and bears the cost of) a proportion of total euro notes in circulation. The overall amount of euro notes to be printed has to be approved by the ECB, as part of its mandate to maintain price stability in the euro area.