Eurozone

Why in News?

Bulgaria, the poorest member of the European Union (EU), became the 21^st member of the eurozone.

• Eurozone/euro area – It represents a monetary union within the EU, distinct from the wider EU membership.
• In other words, it refers to the geographic and economic region comprising those members of the European Union (EU) that have fully adopted the euro as their official currency.
• Maastricht Treaty, 1992 – It laid the foundation for the Eurozone by establishing
  • European Economic and Monetary Union (EMU);
  • A common currency – Euro;
  • European Central Bank (ECB); and  
  • Common Economic Region.
• Eurozone Membership – The Total EU states is 27, of which 21 are members of the eurozone (with Bulgaria, Jan 2026).
• Non‑Eurozone EU states (6) - Denmark, Sweden, Poland, Hungary, Czech Republic, Romania retain their own currencies.
• Special Cases
  • Microstates with EU agreements – Andorra, Monaco, the Vatican City and San Marino use the euro through agreements with the EU.
  • Unofficial euro users – Kosovo and Montenegro use the euro as their sole currency without an agreement.
• Eurozone eligibility – All EU member states, except Denmark (which availed an opt-out clause), satisfy certain “convergence criteria” under the Maastricht Treaty, and certain legal alignment with the European Central Bank (ECB) framework.
• Transition to the Euro – Starting January 1, both the lev and the euro can be used for transactions. From February 1, the euro will become the sole legal tender.
• Gains for Bulgaria – For Bulgaria, joining the Eurozone means credibility in global finance, a stronger European identity, and a tourism boost through seamless travel.

After the US Dollar, the euro is the largest reserve currency, and a vital symbol of European integration and identity.

• Benefits of the eurozone – The countries join the Eurozone to gain stability, competitiveness, cost savings, deeper EU integration, and global credibility.

Reference

Indian Express | Bulgaria joins eurozone