What Is the European Currency Unit?

The European Currency Unit is the currency unit used by European Community countries for internal valuation and settlement. Begins on March 13, 1979. It is a key part of the European monetary system. It consists of 12 currencies, such as the German mark, French franc, British pound, Italian lira, and the proportion of each currency in the European currency unit: Generally adjusted every five years, and its currency value is based on these weights and contents and the exchange rates of the constituent currencies Calculated daily using the weighted average method. The main uses of European monetary units are: as a standard for determining fixed parities and fluctuations between the currencies of member countries; as a unit of account for economic transactions between the institutions of the community; and as a reserve asset of the monetary authorities of member countries. Since the 1990s, the scope of use of European monetary units has gradually expanded, laying a good foundation for the realization of the European Monetary Union. On January 1, 1999, all European currency units were automatically converted into euros at a 1: 1 exchange rate. ^[1]

European Currency Unit

Chinese: European Currency Unit

English: European Currency Unit (referred to as ECU)

Russian:

By a certain amount

The main purpose of the establishment of the European Currency Unit is to ensure that Europe can avoid the negative effects caused by sudden changes in exchange rates, while maintaining the economic convergence of the member states. The European monetary unit is a "basket" currency composed of the currencies of the member states. The proportion of each currency in it is basically equivalent to the economic strength of the country.

European Economy

ECU is

ECU's list price is from Europe

ECU is a special currency with no cash, no central bank, and multiple currency functions. The main uses are:

As a standard for determining the fixed parity rate (central exchange rate) and fluctuation range between the currencies of the member states. The ECU uses a fixed exchange rate system, that is, the central exchange rate of the ECU for each currency pair in the system is first determined.

For example, the central exchange rates of the currency pairs of ECUs in each member country after adjustment on January 12, 1987 are: 1ECU equals 2.05853 German marks, 6.90403 French francs, 42.4582 Belgian and Luxembourg francs, 2.31943 Dutch guilders, 7.85212 Danish kroner, 0.768411 Irish pounds, 1483.58 Italian lira and others. After the central exchange rate of each currency pair ECU is determined, the exchange rate between the two currencies in the system can be calculated.

The European monetary system also stipulates that the exchange rate between the two currencies can fluctuate within 2.25% of the central exchange rate (the Italian lira is 6% above and below other currencies). In this way, the upper and lower intervention points of the central bank of each member country on the currency exchange rate can be calculated. The exchange rate at the center of the European Monetary System has been adjusted many times. The main reason for the adjustment is the imbalances among member countries' inflation, balance of payments and economic growth. The level of inflation is decisive for the fixed exchange rate between member countries. influences.

As the currency unit for accounting, pricing, common expenses, statistics and settlement within the European Community.

As reserve assets of the monetary authorities of member states. According to regulations, member states should deposit 20% of gold or US dollar reserves into the European monetary system, and the European monetary system accordingly allocates equivalent amounts of ECU units as reserve assets of member states.

Since the establishment of ECU, the scope of use has gradually expanded. In addition to the Commonwealth countries, commercial banks and financial markets in Western Europe have also begun to handle deposits, loans, bond issuance, international trade settlement, traveler's checks, credit cards and other services that are settled by ECU. Its role has been valued by more and more countries. The State Administration of Foreign Exchange of the People's Republic of China announces the exchange rate of RMB to ECU daily, and ECUs are also used in foreign trade.