What is this new currency and how does it work?
On January 1, 1999, 12 European Union countries chose to form an economic and monetary union (EMU) and started using the euro. The 12 countries locked their exchange rates to the euro. On January 21, 2002, euro notes and coins became available.
The 12 countries share a single interest rate, set by the European Central Bank (ECB), and a single foreign exchange rate policy. From that date, the ECB was responsible for the monetary policy of these 'euro zone' countries.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. Since then, Greece and Slovenia have joined the Eurozone, as well as Latvia using the Euro beginning January 1, 2014.
In addition, Andorra, Montenegro, San Marino and the Vatican (the Holy See) have subsequently adopted the new currency. All other EU members are scheduled to adopt the euro over the next decade, with the exception of Great Britain, Denmark, and Sweden, as they have not agreed to switch. All of the EU members that still use their own currencies - do accept the euro.
The new currency is called the euro. A euro will be made up of 100 cents. 5, 10, 20 50, 100, 200 and 500 notes are available, as well as 1 and 2 euro coins, and 1, 2, 5, 10, 20 and 50 cents coins.
On January 1, 2002, euro notes and coins became legal tender anywhere in the participating countries, regardless of the country of origin. They now circulate alongside national notes and coins. Old national notes and coins were removed from circulation by January 31, 2002. This varied some, country to country, but by July 2002, only euros will be in circulation and they will be the official currency. The period from January-July is sometimes referred to as the "dual circulation" period, and it ends soon.
While the UK is outside EMU, the euro will be like any other foreign currency. Businesses can decide to accept the euro if they wish. The same is true for Denmark and Sweden.