European Currency Unit


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Related to European Currency Unit: European Monetary System

European Currency Unit (ECU)

An index of foreign exchange consisting of European currencies, originally devised in 1979. Also see Euro.

European Currency Unit

Prior to the adoption of the euro, the ECU was set up as currency basket to provide a methodology for reconciling differing exchange rates between currencies who wished to participate in the single European currency. Established in the 1979, it was known as a "semi-pegged" system in which currencies were variable with respect to each other only within a certain range. After the introduction of the euro in 1999, the exchange rate mechanism was replaced by ERM II, which reconciles exchange rates for countries wishing to join the eurozone. See also: Exchange rate mechanism.

European Currency Unit (ECU)

A weighted index of the currencies of ten European Economic Community members. For bonds denominated in ECUs, U.S. investors risk not only the possibility of interest-rate increases but also the chance that the dollar will rise relative to the ECU (that is, one ECU will buy fewer dollars). On the plus side, these securities provide investors with the opportunity of overseas diversification without reliance on the currency of a single country.

European Currency Unit

see EUROPEAN MONETARY SYSTEM.

European Currency Unit (ECU)

the former monetary asset used by member countries of the EUROPEAN MONETARY SYSTEM (EMS) to value the EXCHANGE RATES of members’ currencies which are held as part of their INTERNATIONAL RESERVES to settle payment imbalances between members. The ECU was replaced in January 1999 with the introduction of a new currency, the EURO, as part of ECONOMIC AND MONETARY UNION.

Unlike other reserve assets such as GOLD, ECUs had no tangible life of their own. They were ‘created’ by the EMS's European Monetary Cooperation Fund in exchange for the in-payment of gold and other reserve assets by members and took the form of bookkeeping entries in a special account managed by the Fund. The value of the ECU was based on a weighted basket of members’ national currencies.

References in periodicals archive ?
In addition, the Swedish and Norwegian monetary authorities abandoned their currencies' links to the European currency unit on November 19 and December 10 respectively.
Mondex International, a subsidiary of MasterCard International, today demonstrated the first multi-currency smart card capable of carrying an electronic version of the new European currency unit, the Euro.
The European Monetary System (EMS), the European Currency Unit (ECU) and the proposed Economic and Monetary Union (EMU) are often in the news.
By late August and during most of September, market attention focused on pressures within the exchange rate mechanism (ERM) of the European Monetary System (EMS) and between the EMS and those currencies linked to it through the European currency unit (ECU)--for example, the Finnish markka and Swedish krone.
Then, late in European trading on Friday, May 17, Sweden' s Riksbank announced that it would link the Swedish krona to the European currency unit (ECU), replacing its trade-weighted basket of currencies, in which the dollar carried the largest weight, with a basket composed entirely of European Community currencies.
The case was a tortuous affair starting with an initial fine in 1989 of 320,000 ECUs, or European currency units, the virtual currency used by the Commission before the Euro launch in 1999.
Loans denominated in European currency units (ECUs).

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