Currencies related to the euro

Currencies related to the euro


Currently there are several currencies pegged to the euro, some with fluctuation bands around a central rate and others with no fluctuations allowed around the central rate. This can been seen as a safety measure, especially for currencies of areas with weak economies, as euro is seen as a stable currency and therefore would prevent collapse of currencies pegged to it, unless the euro itself were to collapse or the country were to run out of euros to exchange for their currency.

A few currencies remain pegged to the euro by virtue of the fact they were already pegged to one of the predecessors to the euro before the euro's introduction. The French franc and the German mark were the most widely used pre-euro currencies for pegging.

Currencies pegged to the euro


The Bulgarian Lev is pegged to the euro through a currency board. Estonia and Lithuania joined ERM II on 28 June 2004, Cyprus, Latvia and Malta joined on 2 May 2005; these currencies had been pegged to the Euro before joining ERM II. Malta was pegged to a basket of currencies where the Euro had a 70% weighting. As part of ERM II, the currencies have a fluctuation band of ±15%. However, some states have committed to a tighter fluctation band.

Convertible mark is the currency of Bosnia and Herzegovina and it was fixed to 1 German mark when it was introduced on the basis of the Dayton agreement; consequently after introduction of the euro, the Convertible mark uses the German-mark-to-euro rate at 1.95583 BAM per euro.

A number of other currencies are related to the euro in the manner without being actually pegged to it or officially restricted to a certain fluctuation margin. For example, the Pound sterling until the summer of 2007 hovered around £0.68 per euro, but since then has depreciated to £0,79 per euro. The Swiss franc has in recent years hovered around 1.55 CHF per euro and the Croatian kuna around 7.35 HRK per euro. Several other currencies of countries in the vicinity of the Eurozone (the Moroccan dirham being one) have been virtually pegged to the euro, usually in an effort to control inflation by the respective national banks. Some of these actually track the euro more closely than a couple of currencies which are officially pegged, namely the Slovak Koruna, which have been allowed to strengthen due to strong foreign investment, exports, and economic growth. []


External links

* [ ECB latest press release on central rates and bands for ERM II]

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