ECU

acronym Also written Ecu or ECU (Business World) Short for European Currency Unit, a unit of account used as a notional currency within the EMS and in Eurobond trading, and intended as the future common currency of EC countries under EMU°. Also, a coin denominated in ecus. Etymology: An acronym formed on the initial letters of European Currency Unit, but influenced by and deliberately referring back to the French word ÷cu, a name for a historical French gold or silver coin worth different amounts in different periods. This influence explains the fact that most English speakers use an anglicized version of the French pronunciation rather than spelling out. History and Usage: Ecu was adopted as the name for the European Community's currency unit in the early seventies (after a short period during which it was known as the EMU, or European Monetary Unit). In the UK the word was hardly known outside financial markets until the late eighties, when it became a central subject in discussions of EMS and EMU. The value of the ecu is based on a weighted average of a 'basket' of European currencies. The Delors report provided for the ecu to become the single European currency in the third stage of development of EMU, replacing the existing national currencies of EC member states. The UK government in particular opposed this implied loss of national sovereignty, and the Chancellor John Major put the issue at the centre of his counter-proposals for EMU in June 1990, suggesting an intermediate stage when Europe would use a hard ecu alongside national currencies, moving on to the ecu as a single currency unit only if individual member states decided they wanted this. Ecu coins were minted as collectors' items in some countries, including Belgium, where they have been legal currency since 1987, but are rarely used. Ecus were increasingly popular for business transactions, travellers' cheques, and as a stable currency for mortgages before the UK's entry to the ERM in October 1990. A million ecus make one mecu and a billion ecus one becu, although neither term is in common use. Charcol has launched a mortgage in ECUs...because ECUs should be less volatile than a single currency. Sunday Times 19 Feb. 1989, Business section, p. 15 'I think that really it will become a reality when that currency exists,' he says, pulling an ECU coin out of his pocket. Financial World 7 Mar. 1989, p. 40 The 1989 budget was adopted on 15 December 1988 and provides for total Community expenditure of 44.8 becu (ø29.9 bn) in payment appropriations. Accountancy June 1989, p. 43 Another clever aspect of Mr Major's scheme is that the EMF would manage the ecu so that it was never devalued at a currency realignment: it would be a 'hard ecu'. Economist 23 June 1990, p. 64