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The euro outside the euro area

The euro is the official currency of the euro area and is used widely in global currency markets. The euro is also used, for various reasons, as an official or de facto currency by a number of third countries and regions outside the European Union.

Certain parts of the euro area are part of the European Union even though they are not on the European continent, such as the French overseas departments of Guadeloupe, French Guyana, and Martinique in the Caribbean, and Réunion in the Indian Ocean. The Portuguese islands of Madeira and the Azores, and the Spanish Canary Islands, all in the Atlantic Ocean, are other examples.

As part of the euro area, and because they fall within the legal rights, capacity, and supervision of the relevant European Union Member State,  these regions use the euro normally. However, the euro can also be found in other countries and regions which are neither part of the European Union nor the euro area.

Who else uses the euro?

Four such entities have adopted the euro as their official currency: the Principality of Monaco, the Republic of San Marino, the Vatican City State and lately also the Principality of Andorra.

Previously, Monaco used the French franc while San Marino and the Vatican used the Italian lira. They were allowed by France and Italy, respectively, to issue their own coins in those currencies. They have concluded monetary agreements with the EU and, therefore, now use the euro; they can produce limited quantities of euro coins with their own design on the national side, but cannot issue euro banknotes.

The monetary agreements with the EU, signed before the introduction of euro banknotes and coins in 2002, have been renegotiated in order to correct some shortcomings in implementation, and increase the maximum volume of coins these countries are entitled to issue. The new agreement with the Vatican entered into force on 1 January 2010, the one with Monaco followed on 1 December 2011 and the one with San Marino on 1 August 2012.

Andorra, an independent principality on the French-Spanish border with no former official currency, had been using the euro as a de facto currency for several years, meaning that the euro had no legal status in Andorra but was commonly circulated. The euro had de facto replaced the Spanish peseta and the French franc, which had previously been in circulation. On 30 June 2011, a Monetary Agreement was concluded and signed between Andorra and the European Union. It entered into force on 1 April 2012. As a result, Andorra is now able to use the euro as its official currency and as of July 2013 it will issue its own euro coins.

Moreover, certain French overseas territories, which are not part of the European Union, use the euro as their official currency through agreements with the EU. These are the Saint-Pierre-et-Miquelon islands close to the eastern coast of Canada, the island of Mayotte in the Indian Ocean and the Island of Saint-Barthélemy as of 1 January 2012. These territories do not issue their own coins.

Kosovo and Montenegro, in the Balkans, use the euro as a de facto domestic currency, as they have no agreements with the EU; this is keeping with an older practice of using the German mark, which was previously the de facto currency in these areas.

Legislation

Monaco

San Marino

Vatican City

Saint-Pierre-et-Miquelon and Mayotte

Andorra