Member states of the European Union (EU) have adopted the Euro (€) as the common currency and the sole legal tender. The EU consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. The monetary policy of the EU is set by the European Central Bank (ECB).
Since the formation of the EU, the Euro has increased its value until the financial crisis in late-2000. The Euro stand at $1.42 and even reached higher, and today it has declined to $1.25. Why the Euro is sliding? There are many reasons. The main and the foremost is the recession in the EU zone. Countries such as Greece and Ireland are feeling the downturn much more than rest of the EU countries. Spain, Portugal and Italy are right behind them. Even with ECB buying of the sovereign debt of member countries, it is unlikely to stop the downward spiral of the Euro. The EU is requiring member states who are receiving assistance with their economies, especially bailout from the ECB, to adopt strict austerity measures to stop the downfall of the Euro as well as their economies.