What is the 'Eurozone'

The eurozone is a geographic and economic region that consists of all the European Union (EU) countries that have fully incorporated the euro as their national currency.

As of 2018, the eurozone consisted of 19 countries in the EU: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherands, Portugal, Slovakia, Slovenia and Spain. 


The eurozone is one of the largest economic regions in the world and its currency, the euro, is considered one of the most liquid when compared to others. This region's currency continues to develop over time and is taking a more prominent position in the reserves of many central banks.

History of the Eurozone

In 1992, the countries making up the European Community (EC) signed the Maastricht Treaty, thereby creating the EU. The creation of the EU had a few areas of major impact—it promoted greater coordination and cooperation in policy, broadly speaking, but it had specific effects on citizenship, security and defense policy, and economic policy. 

Regarding economic policy, the Maastricht Treaty aimed to create a common economic and monetary union, with a central banking system (the European Central Bank (ECB)) and a common currency (the euro).

In order to do this, the treaty called for the free movement of capital between the member states, which then graduated into increased cooperation between national central banks and the increased alignment of economic policy among member states. The final step was the introduction of the euro itself, along with the implementation of a singular monetary policy, coming from the ECB.

It also introduced convergence criteria, or requirements that countries must meet in order to use the euro as currency. 

According to CNN, these include

1) limitations for budget deficits and public debt,

2) exchange rate stability,

3) inflation rates within 1.5% of 3 EU countries with the lowest rate, and 

4) long term interest rates within 2% of the three lowest rates in the EU. 


  1. Euro

    The euro is the official currency of 19 members of the European ...
  2. European Union - EU

    The European Union (EU) is a group of countries that acts as ...
  3. European Economic and Monetary ...

    The European Economic and Monetary Union (EMU) combined the European ...
  4. European Sovereign Debt Crisis

    The European debt crisis refers to the struggle faced by eurozone ...
  5. Currency Pair: EUR/USD (Euro/U.S. ...

    The Currency Pair EUR/USD is the abbreviation for the euro and ...
  6. Retention Tax

    A mandatory tax placed on income that is earned on investments ...
Related Articles
  1. Tech

    How Would The Euro Trade If If A Grexit Occurs?

    In the event of a Grexit, the euro could head towards parity with the USD.
  2. Insights

    5 Times the European Central Bank Got It Right This Century

    Find out how the ECB made the right moves in pulling the eurozone through many difficult periods despite skepticism the euro would stand the test of time.
  3. Trading

    5 Economic Reports That Affect The Euro

    There are hundreds of reports affecting the FX market. Find out which ones are the most relevant for traders.
  4. Insights

    Eurozone Gains Momentum--But Can It Last?

    Eurozone economic growth has picked up, most notably in France and Italy, but can it last, particularly as Greece continues its standoff with creditors?
  5. Investing

    4 Misconceptions About The Eurozone Crisis

    The eurozone crisis is complicated and rapidly changing. One such misconception is that Greece is the cause of the problem.
  6. Investing

    Buying Euros as a Long-Term Investment: Risks and Rewards

    Learn about the potential risks and rewards of long term investing in the euro and the current status of the European Union's financial markets.
  7. Investing

    Why Britain Withdrew From The ERM

    Britain may have dodged a bullet, but it certainly was not an innocent bystander and still managed to become collateral damage.
  8. Investing

    The ECB's ETF Impact

    The European Central Bank (ECB) looms large for Eurozone stocks and ETFs.
  9. Investing

    Why the Eurozone is ‘Stuck in a Slow-Growth Rut’

    Markit's initial estimates of eurozone economic growth in April, released Friday morning, are far from encouraging.
  1. How do changes in national interest rates affect a currency's value and exchange ...

    Generally, higher interest rates increase the value of a given country's currency, but Interest rates alone do not determine ... Read Answer >>
  2. What is the difference between a nation's current account deficit and its currency ...

    Learn the respective meanings of the two terms, current account deficit and currency valuation, and understand the relationship ... Read Answer >>
  3. What economic indicators are most used when forecasting an exchange rate?

    Discover what economic indicators are most widely used to forecast a country’s exchange rate and how various factors influence ... Read Answer >>
  4. What are key benefits to a country that has engaged in a policy of currency depreciation?

    Learn about key benefits to a country engaging in a policy of currency depreciation, such as smaller trade deficits, employment ... Read Answer >>
  5. Is Cyprus considered a tax haven?

    Explore the factors that resulted in Cyprus abandoning its status as a tax haven, including the terms for the bailout of ... Read Answer >>
Hot Definitions
  1. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  2. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  3. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  4. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
Trading Center