Euro Area, also known as the Eurozone is a monetary union of European countries that have accepted Euro as their common currencies. The union consists of 19 member states of the European Union while the other nine continue to use their own currencies for various transactions. The member nations include the likes of France, Germany and Spain and the Eurozone has become one of the strongest monetary groups in the world. The other members of the European states are free to join the Eurozone any-time they want but before joining they must have fulfilled the criteria for becoming a member. The success of the formation of the Eurozone could be seen from the fact that many economist had started seeing it as the next big currency that would dominate the exchange markets but due to the financial crisis of 2007-08 and now the Greece Bailout problem it has suffered quite a beating from dollar, which again makes dollar the principal currency for foreign exchange. It would be unwise to say in the near future Euro may again become strong and then the tables would turn for good.
The history that led to the formation of Eurozone by housing so many countries to come under one monetary scheme is really an interesting one. It all started from the Cold War era, initially Europe was divided into many factions and each faction held feud against the other, leading to general bloodbath and anarchy. When the World War 2 was over, Europe was so badly shaped that it had to rely from the help of United States of America for issues such as food and security. When the representatives from the world met at the Bretton Woods Conference that led to the Breton Woods Agreement, United States drafted a union of countries that re-energized Europe’s heavily devastated economy with a condition that US tightly monitored according to his needs. Now as the economic security tightened the people of Europe started pursuing their dreams and thus heavy industrialization took place in Europe which was possible due to direct access to US markets who allowed them to trade. Due to so much economic and industrial activities Europe’s financial condition started to improve. Now the reason US allowed so much free trade was because it led them lead and make key decisions in the North Atlantic Treaty Organization (NATO) alliance. All these activities lead to the formation of the European Economic Community which was nothing but the predecessor of European Union.
Everything was flourishing but in 1971 US made a very big decision which again changed the course of the European Economic Community. US President Richard Nixon had given up the Gold standard which resulted in a panic state in the European Economic Community. As soon as the gold standard was abandoned, again started the competition amongst the various floating currencies, same that occurred during the great depression and the urgent need to curtail this competition was needed. The major competition was in accordance with currency coordination to US Dollars and later Germany, whose unification in the late 1980s further aggravated the competition. It is commonly believed that the Euro was mainly designed in a way so that Germany would find not even a single reason to exit from the European Union. Getting Germany in the EU was no easy task as the Eurozone was tailor modeled after the German Currency and heavy set of norms were to be followed if a member had to be in the Eurozone.
Today many countries like Vatican City and Monaco have made a series of agreements with the European Union so that they can use Euro as their currencies and are now free to issue their own coins. The Euro has been unilaterally adopted by two countries namely Montenegro and Kosovo but the thing to notice here is that they do not get to represent themselves in the Euro group or the European Central Bank. The president of the ECB sets the policies of the Eurozone and primarily monitors and controls inflation. Owning to the crisis of 2007 and 2008 the group has made provisions to provide loans to the needing member states.