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European Currency Unit
ISO 4217 Code XEU
User(s) European Community
and later the European Union
Pegged with The ECU was a basket of currencies
Symbol ₠ (rare), ECU or XEU
Plural usually ECUs
Coins Gibraltar issued commemorative Ecu coins.[1] there were also mock-ups. In 1989 the Dutch government issued a series of Ecu coins from ₠2½ to ₠200, which could be spent in shops in The Hague ('s-Gravenhage), during the European Capital of Culture festival.
Banknotes None, although there were mock-ups
Central bank N/A
This infobox shows the latest status before this currency was rendered obsolete.

The European Currency Unit ( or ECU: French pronunciation: [eky], English: /eɪˈkjuː/ or spelt out /ˌiːˌsiːˈjuː/) was a basket of the currencies of the European Community member states, used as the unit of account of the European Community before being replaced by the euro on January 1, 1999, at parity. The ECU itself replaced the European Unit of Account, also at parity, on March 13, 1979. The European Exchange Rate Mechanism attempted to minimize fluctuations between member state currencies and the ECU. The ECU was also used in some international financial transactions, where its advantage was that securities denominated in ECUs provided investors with the opportunity for foreign diversification without reliance on the currency of a single country.[2]

The ECU was conceived on 13 March 1979 as an internal accounting unit. It had the ISO 4217 currency code XEU.

On 1 January 1999, the euro (with the code EUR and symbol ) replaced the ECU, at the value €1 = 1 ECU. Unlike the ECU, the euro is a real currency, although not all member states participate (for details on Euro membership see Eurozone). Two of the countries in the ECU basket of currencies, UK and Denmark, did not join the eurozone, and a third, Greece, joined late. On the other hand, Finland and Austria joined the Eurozone from the beginning although their currencies were not part of the ECU basket (since they had joined the EU in 1995, two years after the ECU composition was "frozen").

Due to the ECU being used in some international financial transactions, there was a concern that foreign courts might not recognize the euro as the legal successor to the ECU. This was unlikely to be a problem, since it is a generally accepted principle of private international law that states determine their currencies, and that therefore states would accept the European Union legislation to that effect. However, for abundant caution, several foreign jurisdictions adopted legislation to ensure a smooth transition. Of particular importance here were the USA states of Illinois and New York, under whose laws a large proportion of international financial contracts are made. Both these states passed legislation to ensure that the euro was recognized as successor to the ECU.

Although the acronym ECU is formed from English words, écu is also the name of an ancient French coin. That was one (perhaps the main) reason that a new name was devised for its successor currency, euro, which was felt not to favour any single language. An additional problem with the name lay in the similarity in pronunciation of the German phrases "ein ECU" ("an ECU") and "eine Kuh" ("a cow")[3] and the pronunciation of the word in Portuguese being similar to the jargon "é cú" ("is ass").

The currency's symbol, ₠ (U+20A0), comprises an interlaced C and E, which are the initial letters of the phrase 'European Community' in many European languages. However, this symbol was not widely used: few systems at the time could render it and in any case banks preferred (as with all currencies) to use the ISO code XEU.

Approximate national currency weights to the ECU value
Currency 13.03.1979-
16.09.1984
17.09.1984-
21.09.1989
21.09.1989-
31.12.1998
BEF 9.64% 8.57% 8.183%
DEM 32.98% 32.08% 31.955%
DKK 3.06% 2.69% 2.653%
ESP - - 4.138%
FRF 19.83% 19.06% 20.316%
GBP 13.34% 14.98% 12.452%
GRD - 1.31% 0.437%
IEP 1.15% 1.20% 1.086%
ITL 9.49% 9.98% 7.840%
LUF - - 0.322%
NLG 10.51% 10.13% 9.98%
PTE - - 0.695%

See also

External links

References

  1. ^ Gibraltar coins
  2. ^ David L. Scott, Wall Street Words (3rd ed. 2003), p. 130.
  3. ^ What Fits in Europe's Wallet?. The New York Times, 1995-07-11
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