Austria's Euro Membership: What's The Deal?

Austria has been a member of the European Union since 1995 and was one of the first countries to adopt the euro as its official currency on 1 January 1999. The euro banknotes and coins were introduced in Austria on 1 January 2002, after a three-year transition period. The country's former currency, the schilling, was replaced by the euro, and the dual circulation period ended on 28 February 2002. Austria's membership in the European Union has had a significant impact on its foreign and European policy, allowing it to advocate for its concerns within the EU decision-making structures.

Austria's currency before the Euro

Before Austria adopted the euro, the country's currency was the schilling, which was divided into 100 groschen. The schilling was first introduced in 1925 and was used until 1938 when Germany annexed Austria and the German Reichsmark replaced the schilling. The schilling was reintroduced in 1945 following World War II and was in use until 1999 when Austria formally adopted the euro. The schilling continued to be used alongside the euro as a form of legal tender until 2002.

The history of the Austrian schilling can be traced back to the Carolingian coin reform in 794 AD, which introduced new units of account, including the schilling, which consisted of 12 silver pfennigs. Initially, the schilling was only a coin of account, but it later became an actual coin produced in many European countries.

Prior to the introduction of the modern Austrian schilling, several other currencies were used in Austria, including:

• The florin: This currency was used in the Holy Roman Empire from the 16th century and was divided into 8 schillings, 60 kreuzer, or 240 pfennigs.
• The Austro-Hungarian gulden: Introduced in 1857, this currency was divided into 100 neukreuzer.
• The Austro-Hungarian krone: Adopted in 1892 upon the adoption of the gold standard.
• The Austrian crown: Introduced in 1919 following the dissolution of the Austro-Hungarian Empire.

The schilling was established by the Schilling Act (Schillingrechnungsgesetz) on December 20, 1924, at a rate of one schilling to 10,000 kronen. The first schilling coins were issued on March 1, 1925, in denominations of 1 and 2 groschen, 10 groschen, and 1/2 and 1 schilling.

During World War II, the schilling was temporarily replaced by the Reichsmark in 1938 when Germany annexed Austria. However, the schilling was reintroduced after the war on November 30, 1945, by the Allied Military. Paper money dated 1944 was issued in denominations ranging from 50 groschen to 1,000 schilling. The exchange rate to the Reichsmark was set at 1:1, with a limit of 150 schilling per person.

In 1946, the first schilling coins were issued, and in 1947, new banknotes were introduced, replacing the earlier notes at a rate of 1 new schilling for 3 old schillings. The currency stabilised in the 1950s, with the schilling being tied to the US dollar at a rate of $1 = 26 schilling. Following the breakdown of the Bretton Woods system in 1971, the schilling's value was tied to a basket of currencies until 1976, when it was coupled to the German mark.

When Austria adopted the euro as its official currency in 1999, the exchange rate was set at €1 = 13.7603 schilling. Old schilling-denominated coins and notes were gradually phased out and replaced by euro banknotes and coins by 2002. Despite the transition to the euro, the Oesterreichische Nationalbank continues to exchange schillings for euros indefinitely at the fixed parity rate.

When did Austria join the EU?

Austria's journey to becoming a member of the European Union was a long and complex one. The country's relationship with Europe has evolved over the decades, with several significant milestones along the way.

In the early years after World War II, Austria received assistance and funding from organisations like the United Nations Relief and Rehabilitation Administration (UNRRA) and the European Recovery Program (ERP), which played a crucial role in its economic reconstruction. During this period, Austria also chose neutrality, which was seen as a "detour on the way to Europe." Despite this, Austria continued to foster economic ties with European nations, particularly through organisations like the Organisation for European Economic Cooperation (OEEC) and the European Coal and Steel Community (ECSC).

In the 1950s and 1960s, Austria explored potential integration with the European Economic Community (EEC), but domestic political resistance and external factors, such as the Soviet Union's influence, hindered these efforts. Austria's focus on Western Europe during this period led to a shift away from Central and Eastern European relations, which would later become significant.

The turning point came in 1989, a pivotal year in European history with the fall of the Berlin Wall and the end of the East-West conflict. Austria formally applied for accession into the European Union in 1989, and after five years of negotiations and a national referendum, it finally joined the EU on January 1, 1995, alongside Sweden and Finland. This marked the culmination of Austria's long-standing integration efforts and signified its commitment to economic and political cooperation within Europe.

Since becoming a member of the EU, Austria has actively participated in the Union's institutions and decision-making processes. It has held the rotating presidency of the Council of the European Union three times: in 1998, 2006, and 2018. Additionally, Austria has benefited economically from its membership, with increased exports, job creation, and a boost to its overall competitiveness within Europe.

When did Austria adopt the Euro?

Austria joined the European Union in 1995 and was one of the first countries to adopt the euro as its currency.

On the 1st of January 1999, Austria became a member of the Eurozone, or euro area, and replaced its national currency, the schilling, with the euro. However, the physical euro banknotes and coins were not introduced until three years later, on the 1st of January 2002, marking the end of the dual circulation period during which both the schilling and the euro had legal tender status. This transitional period, from 1999 to 2002, was when the euro was the official currency but only existed as 'book money'.

Austria's adoption of the euro was part of a broader effort to stabilise its economy and meet the financial criteria for joining the EU. The country's economy had experienced difficulties, and various austerity measures were implemented to address these issues and prepare for the transition to the single European currency.

The introduction of the euro in Austria involved a process of gradual implementation, with the currency initially existing only in non-physical form for a few years before the physical banknotes and coins were circulated. This transition period allowed for a smooth adjustment to the new currency and ensured the euro's successful establishment as the country's primary form of payment.

The Euro's impact on Austria's economy

Austria has been a member of the European Union since 1995 and was one of the first countries to adopt the euro as its official currency on 1 January 1999. The euro banknotes and coins were introduced in Austria on 1 January 2002, after a three-year transition period during which the euro was the official currency but existed only as 'book money'. The dual circulation period, when both the schilling and the euro had legal tender status, ended on 28 February 2002.

Austria's economy has been positively impacted by its adoption of the euro. The country ranks fifth in the European Union in terms of GDP per capita, with €46,200, well above the EU average of €37,600. Austria's highly industrialised economy and well-developed social market economy contribute to its consistently high ranking in terms of GDP per capita.

Additionally, the euro has facilitated Austria's participation in the EU's Common Foreign and Security Policy and its contribution to peacekeeping and humanitarian missions. Austria's federal parliament, consisting of two chambers, plays a crucial role in shaping the country's economic policies and its engagement with the EU.

Overall, the euro has had a positive impact on Austria's economy, contributing to its high GDP per capita and enhancing its trade relationships within the European Union.

Austria's membership of the Economic and Monetary Union

Austria has been a member of the European Union since 1 January 1995 and was one of the first countries to adopt the euro as its official currency on 1 January 1999. The euro banknotes and coins were introduced in Austria on 1 January 2002, after a three-year transition period during which the euro was the official currency but existed only as 'book money'.

The euro is the common currency of the Economic and Monetary Union, of which Austria is a member. Austria's euro coins have a unique design for each denomination, with a common theme for each of the three series of coins. The minor coins feature Austrian flowers, the middle coins feature examples of architecture from the capital, Vienna, and the two major coins feature famous Austrians. All designs are by Josef Kaiser and also include the 12 stars of the EU, the Flag of Austria, and the year of imprint.

The euro currency is shared with numerous other European countries within the Eurozone: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Slovakia, Croatia, Finland, Estonia, Latvia, and Lithuania. Austria uses the full range of euro coins and notes.

The euro replaced the Austrian Schilling, which was used between 1925 and 2002. The Schilling replaced the Krone, which was used during the monarchy.

Frequently asked questions