In this article, We learn about “European Currency Unit (ECU)”.Let’s Go!
The European Currency Unit (ECU) is a man-made “basket” currency used by European Union (EU) member states as their internal accounting unit.
The “basket” of currencies is weighted according to each country’s share of EU output.
Currencies are Belgian Franc, Deutsche Mark, Danish Krone, Spanish Peseta, French Franc, British Pound, Greek Drachma, Irish Pound, Italian Lira, Luxembourg Franc, Dutch Guilder, and Portuguese Escudo.
The term écu is considered as one word, in French the name of an old French coin. The ISO-4217 symbol for ECU is “XEU”.
ECU was proposed on March 13, 1979 by the European Economic Community (EEC), the predecessor of the European Union, as the unit of account for the currency area known as the European Monetary System (EMS).
The ECU was created by the European Economic Community with the aim of eventually becoming a single currency that would unify Western European economies.
The value of
ECU is used to determine the exchange rate and reserves between EMS members, but it is always a
unit of account, not the real currency .
Although it is not used for normal day-to-day transactions, it is increasingly used for commercial banking transactions. Its relative stability makes it better suited than national currencies for determining the terms of contracts.
By the early 1990s, it was especially important in international bond markets, becoming the second most widely used currency (after the U.S. dollar).
The ECU is the predecessor to the new European Union single currency, the euro, launched on January 1, 1999
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