The European Union approved a single European currency in the 1992 Maastricht Treaty.
Under the agreement:
On Jan. 1, 1999, countries in the accord will lock the exchange rates of their currencies to the new euro.
From then until Dec. 31, 2001, their currencies will be stated as units or denominations of the euro. But during this period, national currency banknotes and coins still will be produced and circulated.
Starting in January 2002, euro banknotes and coins will begin to circulate alongside national notes and coins.
After a dual-circulation period of up to six months, national currency notes and coins will be phased out. They will not be accepted as legal tender beyond July 2002.
Not all 15 EU members are participating in monetary union, which might make for a sticky transition. The 11 initial participants in the euro conversion are Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy, Luxembourg, Portugal and Spain.
Two more countries - Sweden and Greece - are expected to join in 2001. But the United Kingdom still has not decided to join the EMU, and Denmark has voted against participation.