News: Bulgaria adopted the euro as its currency in 2026, becoming the 21st euro zone member and gaining representation in ECB monetary decisions.
About Euro Zone
- The euro zone, also called the euro area, is a currency union of European Union member states that use the euro as their sole legal tender.
- Total Members: The euro zone has a total of 21 member countries.
- Latest Entry: Bulgaria became the 21st member on January 1, 2026.
- Non-Euro EU Members (6) : The non-Euro EU members are Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden, who maintain their national currencies, though most are legally committed to adopting the Euro once.
- History
- Maastricht Treaty (1992): It was a landmark agreement that officially created the European Union (EU) consisting of three pillars:
- European Communities;
- Common Foreign and Security Policy (CFSP);
- police and judicial cooperation in criminal matters (JHA).
- It also established the legal framework for the Economic and Monetary Union (EMU).
- It set out the path for a single currency (the euro) and a unified monetary policy under the European Central Bank (ECB).
- Launch: The Euro was introduced for electronic payments in 1999 and physical notes/coins in 2002.
- Maastricht Treaty (1992): It was a landmark agreement that officially created the European Union (EU) consisting of three pillars:
Institutional Framework
- Monetary Authority
- Monetary policy in the euro zone is managed by the independent Eurosystem.
- The Eurosystem includes the European Central Bank and national central banks of euro-area states.
- The ECB’s Governing Council sets a single monetary policy focused on price stability.
- The Eurogroup: An informal body of finance ministers from Eurozone countries that coordinates fiscal policies.
- European Stability Mechanism (ESM): A permanent bailout fund (established in 2012) providing financial assistance to Eurozone countries in severe financial distress.
- Monetary policy in the euro zone is managed by the independent Eurosystem.
- Joining Criteria (Maastricht Criteria)
- Price Stability (Inflation): Average inflation must not exceed the average inflation of the three best-performing EU countries with the lowest inflation by more than 1.5 percentage points.
- Sound Public Finances (Deficit): The annual government deficit must not be more than 3% of GDP. If the deficit is over this limit, it must be significantly reduced.
- Sound Public Finances (Debt): Government debt should not exceed 60% of GDP. If it exceeds this level, it should be converging sustainably towards it.
- Exchange-Rate Stability: The country must participate in the Exchange Rate Mechanism (ERM II) for at least two years. During this period, the country must not face severe tensions or devaluation.
