What is a European currency unit?
The European currency unit, also known as ECU, was an accountant of the European currency system and the predecessor of the euro between 1979 and 1998. Its currency code was XEU, but sometimes it was also used EDU. The European currency unit was not a real currency because there were no accounts or coins. It was a firm basis of currencies - a group of currencies from several countries - to stabilize exchange courses and support cash stability in Europe.
The European currency unit, the instrument mechanism tool (ERM), created a weighted average of all participating European currencies. This created a collective artificial currency designed to use and stabilize the currencies of European Member States. ERM also determined all currencies through a bilateral obligation to a range of +/- 2.25%.
The European monetary system decided to calculate the European monetary unit as a solid currency basket. Monetary baskets use a predetermined set of currencies to determine a collective value or amount. The amount of each currency remains firmly when calculating the valueStarted - originally established and changed during revision - and the weight of each currency varies. Weights were calculated according to the percentage of the gross national product of the European Community (EC), the level of international trade and importance as a reserve currency.
International investors benefited from the European currency unit because it was more stable than its components of the European currency. This could be expected, because the currency based on a weighted average shows finer changes in the level than the movements of individual currencies. This stability allowed foreign investors to diversify and expand without having to rely on the currency of one country, to increase the width and strength of the member communities.
European currency Unit has become the largest artificial currency. International Companies As part of the EC -calculated assets and obligations in European monetary units, bonds were issued in these units and units were traded by the end of the 80sy outside Europe. Widespread markets allowed European currency units to accept many real currency roles.
Despite its big role in investment and bond issuing, the European monetary unit rarely used to carry out domestic transactions. In fact, most domestic monetary policies ignored the effects of a monetary basket because the transaction in relation to domestic money supplies was negligible. Not all commercial banks offered the opportunity to pay in European currency units, although some checks were issued in the currency.
The birth of European currency units came from hope for a possible one -off currency. The Euro therefore practically replaced the monetary basket in 1999 at a ratio of 1: 1. Euro Notes and Coins began to circulate and replace domestic currencies in Europe in 2002.
Implementation of the European currency unit on bond markets and inspired proposals for other collective currencies for investment purposes. The proposed Asian currency unit and world currency units modeled SVItems from the European currency unit. However, both proposed currencies have met many obstacles and remain the theoretical nature.