Coming to Grips with Europe: Who uses the euro?
Okay, so you think you’ve got Europe absolutely sussed out? You recognize the difference between an ogonek and an umlaut, know your pelmeni from your pierogi, and can map with precision the boundaries between the six time zones that straddle the European mainland? (Yes, there really are six separate one-hour time zones on the mainland alone).
So tell us: Which countries use the euro? And, for that matter, which are a part of the European Union?
A Europe of shifting alliances
Even the most studied Europhile stumbles when it comes to unraveling membership of Europe’s various transnational clubs like Schengen, the Eurozone and the European Union. Some European countries (like France and Germany) are members of all three. Other European countries (like Croatia and the Faroe Islands) are not full members of any of the three alliances, yet their European credentials are undisputed.
Membership in one of the three does not presuppose, nor is it contingent upon, membership of any other of the three. For example, Iceland is neither in the European Union nor the Eurozone, yet it is a member of Schengen. Ditto Switzerland and Norway.
But these matters are fabulously complicated. After all, while Norway proper is in Schengen, the islands of the Svalbard archipelago (north of the Norwegian mainland) are not part of the Schengen area.
Currency matters: The euro
And what of the euro? When the wise men and women at the European Central Bank (ECB) meet to juggle interest rates and ponder macroeconomic policy options, the impacts of their deliberations are felt way beyond the sixteen nations of the Eurozone proper. That’s because the euro is the standard currency for many other countries and territories: from Montenegro in the Balkans to tiny island communities in the Indian Ocean, the Caribbean, and off Canada’s east coast.
It is perfectly possible for countries like Andorra and Kosovo to use the euro without being officially part of the Eurozone – though Andorra would dearly like to mint its own euro coins and is presently in negotiation with the ECB to secure that privilege (in just the way that Monaco and San Marino have done).
Widen the net to include the various currencies around the world that are fixed (more or less permanently) to the euro, and we see that the ECB’s economic decisions reverberate around the globe. There are two dozen non-Eurozone countries that use currencies pegged to the euro, among them Bosnia, Bulgaria, Estonia, the Cape Verde Islands, Chad, and Senegal.
Now that we’ve managed to wrap our heads around this tangled mess, it is worth noting that every now and again we run across places we would expect to be in the Eurozone but turn out not to be – and vice versa. For example, the German village of Büsingen (on the Rhine) and the north Italian village of Campione d’Italia both use the Swiss franc as their principal currency (although in truth the euro is widely accepted in both communities, too).
The British situation
And so to Britain. A half-hearted member of the EU, not a full member of Schengen (viz. party to aspects of the Schengen Agreement but outside the Schengen area for visa and immigration purposes) and definitely outside the Eurozone.
The banknotes in our wallets may be a mark of our identity, but in the complex world of European affairs, sometimes a territory’s choice of currency may be more a question of pragmatism than political allegiance. Liechtenstein is no less independent merely because it uses the Swiss franc – just as Ecuador and East Timor remain sovereign countries despite using dollar banknotes.