When it was introduced, the € (Euro) was supposed to be the common currency for the entire EU, even if it turned out many countries (such as the UK) would stay in the EU without using the € currency, and that other countries (such as Kosovo) would use € without being part of the EU.

Exchanging money is an inconvenience when for example exporting or importing goods, and while being on holidays in a foreign country. Nevertheless, it's a pretty minor inconvenience compared to the major issues the Eurozone have to face today.

The European union existed from 1957 to 2001 without having a common money and it was healthy at that time. What were the argument towards the requirements of a common money for member states?

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    The European Economic Community was established with the Treaty of Rome in 1958. The formation of the European Union happened in 1993 when the Maastricht Treaty came into force. The term EU refers to the latter only. Aug 7, 2015 at 1:09
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    Euro was never necessary. Many economists had warnings about potential danger of such currency union - now that warnings have been materialized. Only country benefit out of this - Germany - and many thinks euro design was exactly to accomplish that.
    – lowtech
    Aug 10, 2015 at 23:25
  • Note that 2004-2007 was also the time of the big enlargement of the EU. The Euro is an unmitigated disaster but not the only explanation for the EU's current difficulties.
    – Relaxed
    Aug 11, 2015 at 6:09
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    There aren't many EU countries that stayed out of the euro, there are exactly two: the UK and Denmark. The rest is supposed to join it soon and still on a course to do it or, in one case (Sweden), finding technical reasons not to do it while still being (in theory) legally bound to adopt the euro at some point in the future.
    – Relaxed
    Aug 11, 2015 at 6:19
  • I don't think anybody ever argued the Euro (or a common currency in general) be necessary, i.e. unavoidable as the title suggests. I do, however, believe that the people in charge deemed it desirable and thus chose to implement it.
    – Jan
    Apr 16, 2021 at 15:35

3 Answers 3


The main reason for a common currency was to remove the business risk which came from currency fluctuations.

When a company in country A buys goods or services from a company in country B, they need to obtain some currency B to pay the bill. But what happens when the exchange rate between currency A and currency B suddenly changes and currency B is a lot more expensive? Company B can't reduce the previously agreed upon price, because they have contracts with inland suppliers and their employees denoted in currency B. This can make previously cheap imports suddenly prohibitively expensive and can destroy a whole business model.

With a common currency, this risk was removed and business relations across European borders became a lot easier which benefits the economies of all participating countries.

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    This was always an official explanation for those who don't have a knowledge of FX markets. There is standard financial tool to remove such kind of risks - futures contracts. They are used to remove FX rate fluctuation risk (hedging) and successfully used for this purpose in FX and other markets (e.g. oil)
    – lowtech
    Aug 10, 2015 at 23:21
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    @lowtech Hedging works fine for large companies, and even for small companies whose main business is export. It doesn't work nearly so well (eg) a small double glazing company working near the French-German border. Today it is entirely sensible for Fensterbau Breisach GmbH to quote to replace a couple of windows in Neuf Brisach. Before the Euro ... less so. Apr 29, 2019 at 16:33
  • @lowtech with hedging the cost is not socialized nearly to the same extend.
    – user189035
    Apr 13, 2021 at 16:07
  • This answer is certainly plausible, but it lacks any evidence that this was in fact the main reason, or even an important reason. A discussion of whether this benefit outweighs the economic costs of a single currency would also be in order.
    – phoog
    Apr 14, 2021 at 19:16

The main reason is that the European Union (and before that the European Communities) was intended by its architects to bring about ever tighter integration, possibly all the way to a federal state. Seemingly technical measures like the customs union and common market were not only or mainly intended at boosting economic output but at fostering understanding between people “from below”.

This integration was always meant to be a continuous and ongoing process. While it didn't have a common currency, the 2001 European Union was already very different from the 1957 European Economic Community, with the merger of the three European Communities, the directly-elected European Parliament, (mostly failed) attempts at creating a common defense or foreign policy, the police and justice cooperation, the Schengen border-free area, the “EU citizenship” and broader free-movement rights established by the Maastricht treaty, etc.

A single currency would therefore appear like the logical next step, a huge symbol of integration and cooperation. It's possible to find some weak economical arguments for it (enforcing fiscal discipline, preventing currency fluctuations, etc.) but I don't think they were decisive in the process leading to the creation of the euro.

Jacques Delors, who was actually very enthusiastic about the process, famously said that “Europe is like a bicycle. It has to move forward. If it stops, it will fall over.” So the Euro is perhaps the most visible and the most consequential – in a negative sense – of these but it's part of a series of initiatives to deepen the EU that were widely seen as necessary, not in a narrow technical sense, but for the sake of the European project itself.

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    Could you add a source supporting the assertion that this reasoning was in fact influential on the politicians who brought about the euro? This answer strikes me as far more plausible than the currently accepted answer, but still, a source would improve its credibility.
    – phoog
    Apr 14, 2021 at 19:15

The EU has undergone several stages of Regional integration for it to achieve full integration. The stages of Regional integration are :

  1. Preferential Trade Area (PTA)

  2. Free Trade Area (FTA)

  3. Customs Union (CU)

  4. Common Market (CM)

  5. Monetary Union (MU)- common currency is one of its milestones and have been explained by @philipp

  6. Full integration (either a political federation or a fully Integrated Economic community)

Basically last stage usually comprises of the preceding stages E.g a CU = PTA + FTA


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