Differences between Euro and US Dollar
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Euro vs. US Dollar
The Euro (€; EUR) and the United States dollar ($; USD) are the two most traded currencies in the world. The[1] US dollar is the official currency of the United States and its territories, while the euro is the official currency of 20 of the 27 member states of the European Union, collectively known as the eurozone. The[2][3] US dollar holds the status of the world's primary reserve currency, with the euro being the second most widely held reserve currency.
The[2][4][5] euro was introduced to world financial markets on January 1, 1999, as an accounting currency, replacing the European Currency Unit (ECU). Physical[2] euro coins and banknotes entered circulation on January 1, 2002. The[2] US dollar's history is much longer, with the Coinage Act of 1792 establishing it as the country's standard unit of money.
Comparison Table
| Category | Euro | US Dollar |
|---|---|---|
| Symbol | € | $ |
| ISO Code | EUR | USD |
| Issuing Authority | European Central Bank (ECB) and the national central banks of the eurozone countries. | Federal[2] Reserve System. |
| Subunit | 1/100 (cent) | 1/100 (cent) |
| Coins | 1c, 2c, 5c, 10c, 20c, 50c, €1, €2. | 1¢, 5[2]¢, 10¢, 25¢, 50¢, $1. |
| Banknotes | €5, €10, €20, €50, €100, €200, €500. | $1, $2, $5, $10, $20, $50,[2] $100. |
| Primary Users | Eurozone countries, various non-EU European microstates, and some territories of EU members. | United States and its territories;[2] also used as official or de facto currency in several other countries. |
Monetary Policy and Governance
A key distinction between the two currencies lies in their governance structure. The monetary policy for the euro is determined by the Governing Council of the European Central Bank (ECB), which consists of the executive board of the ECB and the governors of the national central banks of the eurozone member states. This structure involves multiple political jurisdictions. In contrast, the monetary policy of the US dollar is conducted by the Federal Reserve System, the central bank of a single political entity. This difference in governance is often cited as a factor in the currencies' respective roles in the global economy, as the fragmented nature of the eurozone's fiscal policies can present challenges.
International Role
The US dollar has been the world's dominant reserve currency since the Bretton Woods Agreement of 1944. A majority of global foreign exchange reserves are held in US dollars. The dollar is also the primary[4][1] currency for invoicing and settling international trade in many key commodities.
The euro is the second most important currency globally. While its share of global reserves[2] is significant, it remains considerably lower than that of the US dollar. The euro plays a major role[4][5][1] in trade invoicing within Europe and parts of Africa. There has been discussion about the euro's potential to challenge the dollar's dominance, but structural factors within the eurozone, such as the lack of a unified capital market and fiscal authority, are considered obstacles.
References
- ↑ 1.0 1.1 1.2 "currencytransfer.com". Retrieved November 22, 2025.
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 "wikipedia.org". Retrieved November 22, 2025.
- ↑ "ebsco.com". Retrieved November 22, 2025.
- ↑ 4.0 4.1 4.2 "morningstar.com". Retrieved November 22, 2025.
- ↑ 5.0 5.1 "prospect.org". Retrieved November 22, 2025.
