Euro Definition, History, Countries That Use It

What Are Euro Notes?

Euro notes are the legal tender in the form of paper banknotes that can be used in exchange for goods and services in the eurozone. Euro notes come in seven denominations: 5; 10; 20; 50; 100; 200; and 500 euros.

The supply of euro notes is controlled by the European Central Bank (ECB), and the notes were first issued in 2002.

Understanding Euro Notes

There are seven euro-denominated banknotes and eight euro coins. The banknotes, with designs described by the ECB as showing "architectural styles from various periods in Europe’s history," are identical throughout the euro area, although euro coins have one side that is country-specific.

All euro notes and coins are legal tender in any country within the eurozone, which at present represents 19 of the 27 countries of the EU. All countries in the EU with the exception of Denmark, which has opt-out clauses, are expected to join the euro area eventually.

The micro-states of Andorra, Monaco, San Marino, and Vatican City also use the euro, as part of a formal arrangement with the European Community. This means that currently, euro notes and coins are circulating in countries with a total population of 340 million people. Following global trends, however, the share of physical cash in transactions has been declining steadily as debit and credit card usage grows. Cash is still popular for smaller transactions but less so for larger ones.

Actual issuance of notes and coins takes place within the Eurosystem, which is the monetary authority of the eurozone—comprising the ECB and the national central banks of the 19 current eurozone members. Each national central bank within the Eurosystem is an official issuer of euro notes, and prints (and bears the cost of) a proportion of total euro notes in circulation. The central bank that commissioned the printing of a banknote (but not necessarily the country of printing) is indicated by a letter or country code preceding the serial number.

The overall amount of euro notes to be printed has to be approved by the ECB, as part of its mandate to maintain price stability in the euro area.

Euro Note Series

There are two series of banknotes. The first series was issued in 2002 and comprises seven denominations: €5, €10, €20, €50, €100, €200 and €500. The second series, or Europa series, consists of six denominations and was completed with the issuance of the €100 and €200 on 28 May 2019.

The first series of notes, is gradually being replaced by the Europa series since the Europa notes have enhanced security and anti-counterfeiting features. These notes are also intended to last for longer due to normal wear and tear in-use.

The second series of banknotes is called the Europa series because two of the security features contain a portrait of Europa. This figure from Greek mythology was included in the new euro banknotes because it has an obvious link to the continent of Europe and also adds a human touch to the banknotes. The image of Europa was taken from a vase in the Louvre in Paris.

All the notes of any series are legal tender throughout the euro area.

Elimination of the 500 Euro Note

In 2016, the ECB announced that it would stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering. The 500 euro note is the largest denomination currently across the common euro currency zone, and the ECB argued that it is the banknote of choice among criminals.

While the stated purpose was to stop financial crime, others have speculated that this move was part of a recent "war" on cash, essentially with the government trying to get rid of cash and eliminate money from the economy.

At the time of ECB's announcement, the number of 500 euro bills in circulation represented over €300 billion, or nearly one-third of all the euro-denominated cash outstanding. Holding on to physical cash is exactly what negative interest rates, as implemented by the ECB and elsewhere, is meant to dis-incentivize. Existing €500 banknotes remains legal tender and will always retain its value.

Special Considerations

Although the euro as a currency of record was introduced on January 1, 1999, it existed wholly as an electronic currency for the first three years of its existence. Physical euro notes and coins only began circulating in the euro area or eurozone (those countries within the European Union (EU) that have adopted the euro as their currency) on January 1, 2002.