Hi!
I read that the pre-EU had a currency unit, ECU, that wasn’t a real currency but more like a instrument of measurement. I just can make it make sense in my head.
In: 2
It was a way to define the value of things that avoided fluctuations in exchange rates.
If you used Franc or Mark or Pounds or Lira to say what somebody owed somebody or needed to pay or receive at some point in the future, the value of that would go up and down with the value of that currency. This is fine if you mostly work in that currency, but bad if you mostly use another one.
So they created a virtual currency whose values was based on the different European currencies taken together. This was more stable than any individual currency,
When everyone moved towards the Euro they froze the currency exchange rates of the currencies against each other and thus froze the exchange rate of these currencies with the virtual one. And then they made it official and started keeping accounts for real in the new currency and eventually issued notes and coins and got rid of the old ones.
Latest Answers