Speculation is the purchase of an asset with the hope that it will become more valuable in the near future. In finance, speculation is the practice of engaging in risky financial transactions in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument—rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, dividends, or interest. Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. Speculation can in principle involve any tradable financial instrument. Speculators are common in the markets for stocks, commodity futures, fine art, real estate, derivatives. Speculators play one of four primary roles in financial markets, along with hedgers, who engage in transactions to offset some other pre-existing risk, arbitrageurs who seek to profit from situations where fungible instruments trade at different prices in different market segments, investors who seek profit through long-term ownership of an instrument's underlying attributes.
With the appearance of the stock ticker machine in 1867, which removed the need for traders to be physically present on the floor of a stock exchange, stock speculation underwent a dramatic expansion through the end of the 1920s. The number of shareholders increased from 4.4 million in 1900 to 26 million in 1932. The view of what distinguishes investment from speculation and speculation from excessive speculation varies among pundits and academics; some sources note that speculation is a higher risk form of investment. Others define speculation more narrowly; the U. S. Commodity Futures Trading Commission defines a speculator as "a trader who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements." The agency emphasizes that speculators serve important market functions, but defines excessive speculation as harmful to the proper functioning of futures markets. According to Benjamin Graham in The Intelligent Investor, the prototypical defensive investor is "...one interested chiefly in safety plus freedom from bother."
He admits, that "...some speculation is necessary and unavoidable, for in many common-stock situations, there are substantial possibilities of both profit and loss, the risks therein must be assumed by someone." Thus, many long-term investors those who buy and hold for decades, may be classified as speculators, excepting only the rare few who are motivated by income or safety of principal and not selling at a profit. Speculation is condemned on ethical-moral grounds as creating money from money and thereby promoting the vices of avarice and gambling. There is opinion that it serves no purposes from a human and economic perspective Nicholas Kaldor has long recognized the price-stabilizing role of speculators, who tend to out "price-fluctuations due to changes in the conditions of demand or supply," by possessing "better than average foresight." This view was echoed by the speculator Victor Niederhoffer, in "The Speculator as Hero", who describes the benefits of speculation: Let's consider some of the principles that explain the causes of shortages and surpluses and the role of speculators.
When a harvest is too small to satisfy consumption at its normal rate, speculators come in, hoping to profit from the scarcity by buying. Their purchases raise the price, thereby checking consumption so that the smaller supply will last longer. Producers encouraged by the high price further lessen the shortage by growing or importing to reduce the shortage. On the other side, when the price is higher than the speculators think the facts warrant, they sell; this reduces prices, helping to reduce the surplus. Another service provided by speculators to a market is that by risking their own capital in the hope of profit, they add liquidity to the market and make it easier or possible for others to offset risk, including those who may be classified as hedgers and arbitrageurs. If any market, such as pork bellies, had no speculators, only producers and consumers would participate. With fewer players in the market, there would be a larger spread between the current bid and ask price of pork bellies.
Any new entrant in the market who wanted to trade pork bellies would be forced to accept this illiquid market and might trade at market prices with large bid-ask spreads or face difficulty finding a co-party to buy or sell to. By contrast, a commodity speculator may profit the difference in the spread and, in competition with other speculators, reduce the spread; some schools of thought argue that speculators increase the liquidity in a market, therefore promote an efficient market. This efficiency is difficult to achieve without speculators. Speculators take information and speculate on how it affects prices and consumers, who may want to hedge their risks, needing counterparties if they could find each other without markets it would happen as it would be cheaper. A beneficial by-product of speculation for the economy is price discovery. On the other hand, as more speculators participate in a market, underlying real demand and supply can diminish compared to trading volume, prices may become distorted.
Speculators perform a risk bearing role. For example, a farmer might be considering planting corn on some unused farmland. However, he might not want to do so because he is concerned that the price might fall too far by harvest time. By selling his cro
Croatia and the euro
Croatia's currency, the kuna, has used the euro as its main reference since its creation in 1994, a long-held policy of the Croatian National Bank has been to keep the kuna's exchange rate with the euro within a stable range. Croatia's EU membership obliges it to join the eurozone, as such the country plans to join the European Monetary System, the pathway to euro adoption. Prior to Croatian entry to the EU on 1 July 2013, Boris Vujčić, governor of the Croatian National Bank, stated that he would like the kuna to be replaced by the euro as soon as possible after accession; this must be at least two years after Croatia joins the ERM2. The Croatian National Bank had anticipated euro adoption within three years of EU entry. However, the EU's response to the ongoing financial crises in eurozone states may delay Croatia's adoption of the euro; the country's own contracting economy poses a major challenge to it meeting the convergence criteria. While keen on euro adoption, one month before Croatia's EU entry governor Vujčić admitted "...we have no date in mind at the moment".
Before Croatia can join ERM II, it must reduce its budget deficit by about 1.5 billion kuna. The European Central Bank was expecting Croatia to be approved for ERM II membership in 2016 at the earliest, with euro adoption in 2019. Many small businesses in Croatia had debts denominated in euros before EU accession. Croatian people use the euro for most savings and many informal transactions. Real estate, motor vehicle and accommodation prices are quoted in euros. Public support for the euro in Croatia A poll in November 2017 by Promocija Plus showed that only 31% support the introduction of euro, while 60% oppose. In its first assessment under the convergence criteria in May 2014, the country satisfied the inflation and interest rate criteria, but did not satisfy the public finances, ERM membership and legislation compatibility criteria. Subsequent convergence reports published in June 2016 and May 2018 came to the same conclusions. Notes In April 2015, President Kolinda Grabar-Kitarović stated in a Bloomberg interview she was "confident that Croatia would introduce the euro by 2020", while Prime Minister Zoran Milanović said at the government session that "some occasional announcements when Croatia will introduce the euro shouldn't be taken seriously.
We'll try to make it as soon as possible, but I distance myself from any dates and ask that you don't comment on it. When the country is ready, it will enter the euro area; the criteria are clear." In November 2017, Prime Minister Andrej Plenkovic said that Croatia is aiming to join ERM-2 by 2020 and to introduce the Euro by 2025. Accession of Croatia to the European Union Enlargement of the eurozone
Sir John Major is a British politician who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 1990 to 1997. He served as Foreign Secretary and Chancellor of the Exchequer in the Thatcher Government from 1989 to 1990, was the Member of Parliament for Huntingdon from 1979 until his retirement in 2001. Since the death of Margaret Thatcher in 2013, Major has been the oldest living former Prime Minister. Born in St Helier, Major grew up in Brixton, he worked as an insurance clerk, at the London Electricity Board, before becoming an executive at Standard Chartered. He was first elected to the House of Commons at the 1979 general election as the Member of Parliament for Huntingdon, he served as a Parliamentary Private Secretary, Assistant Whip and as a Minister for Social Security. In 1987, he joined the Cabinet as Chief Secretary to the Treasury, was promoted to Foreign Secretary two years later. Just three months in October 1989, he was appointed Chancellor of the Exchequer, where he presented the 1990 budget.
Major became Prime Minister after Thatcher's reluctant resignation in November 1990. He presided over British participation in the Gulf War in March 1991, negotiated the Maastricht Treaty in December 1991, he went on to lead the Conservatives to a record fourth consecutive electoral victory, winning the most votes in British electoral history with over 14,000,000 votes at the 1992 general election, albeit with a reduced majority in the House of Commons. Shortly after this though a staunch supporter of the Exchange Rate Mechanism, his government became responsible for British exit from the ERM after Black Wednesday on 16 September 1992; this event led to a loss of confidence in Conservative economic policies and Major was never able to achieve a lead in opinion polls again. Despite the eventual revival of economic growth amongst other successes such as the beginnings of the Northern Ireland peace process, by the mid-1990s, the Conservative Party was embroiled in scandals involving various MPs.
Criticism of Major's leadership reached such a pitch that he chose to resign as party leader in June 1995, challenging his critics to either back him or challenge him. By this time, the Labour Party had abandoned its socialist ideology and moved to the centre under the leadership of Tony Blair and won a large number of by-elections depriving Major's government of a parliamentary majority in December 1996. Major went on to lose the 1997 general election five months in one of the largest electoral defeats since the Great Reform Act of 1832. Major was succeeded by William Hague as Leader of the Conservative Party in June 1997, he went on to retire from active politics, leaving the House of Commons at the 2001 general election. In 1999, a BBC Radio 4 poll ranked. Major was born on 29 March 1943 at St Helier Hospital and Queen Mary's Hospital for Children in St Helier, the son of Gwen Major and former music hall performer Tom Major-Ball, sixty-three years old when Major was born, he was christened "John Roy Major" but only "John Major" was recorded on his birth certificate.
He used his middle name until the early 1980s. Major grew up in Longfellow Road, Worcester Park, where he attended primary school at Cheam Common and from 1954, he attended Rutlish School, a grammar school in the London Borough of Merton. In 1955, with his father's garden ornaments business in decline, the family moved to Brixton; the following year, Major watched his first debate in the House of Commons, where Harold Macmillan presented his only Budget as Chancellor of the Exchequer, has attributed his political ambitions to that event. He credited a chance meeting with former Prime Minister Clement Attlee on the King's Road shortly afterwards. Major left school just before his 16th birthday in 1959 with three O-levels in History, English Language and English Literature, he gained three more O-levels by correspondence course, in the British Constitution and Economics. Major's first job was as a clerk in the London based insurance brokerage firm Pratt & Sons in 1959. Disliking this job, he resigned.
Major joined the Young Conservatives in Brixton at this time. Major was nineteen years old when his father died, at the age of eighty-two on 27 March 1962, his mother died eight and a half years in September 1970, at the age of sixty-five. After Major became Prime Minister, it was misreported that his failure to get a job as a bus conductor resulted from his failing to pass a maths test, he had been passed over owing to his height. After a period of unemployment, Major started working at the London Electricity Board in 1963, where incidentally his successor as Prime Minister, Tony Blair worked when he was young, he decided to undertake a correspondence course in banking. Major took up a post as an executive at the Standard Chartered Bank in May 1965 and he rose through the ranks, he was sent to work in Jos, Nigeria, by the bank in 1967 and he nearly died in a car accident there. Major was interested in politics from an early age. Encouraged by fellow Conservative Derek Stone, he started giving speeches on a soap-box in Brixton Market.
He stood as a candidate for Lambeth London Borough Council at the age of 21 in 1964, was elected in the Conservative landslide in 1968. While on the Council he was Chairman of the Housing Committee, being responsible for overseeing the building of several large council housing estates, he lost his seat in 1971. Major was an active Young Conserv
A central bank, reserve bank, or monetary authority is the institution that manages the currency, money supply, interest rates of a state or formal monetary union, oversees their commercial banking system. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, generally controls the printing/coining of the national currency, which serves as the state's legal tender. A central bank acts as a lender of last resort to the banking sector during times of financial crisis. Most central banks have supervisory and regulatory powers to ensure the solvency of member institutions, to prevent bank runs, to discourage reckless or fraudulent behavior by member banks. Central banks in most developed nations are institutionally independent from political interference. Still, limited control by the executive and legislative bodies exists. Functions of a central bank may include: implementing monetary policies. Setting the official interest rate – used to manage both inflation and the country's exchange rate – and ensuring that this rate takes effect via a variety of policy mechanisms controlling the nation's entire money supply the Government's banker and the bankers' bank managing the country's foreign exchange and gold reserves and the Government bonds regulating and supervising the banking industry Central banks implement a country's chosen monetary policy.
At the most basic level, monetary policy involves establishing what form of currency the country may have, whether a fiat currency, gold-backed currency, currency board or a currency union. When a country has its own national currency, this involves the issue of some form of standardized currency, a form of promissory note: a promise to exchange the note for "money" under certain circumstances; this was a promise to exchange the money for precious metals in some fixed amount. Now, when many currencies are fiat money, the "promise to pay" consists of the promise to accept that currency to pay for taxes. A central bank may use another country's currency either directly in a currency union, or indirectly on a currency board. In the latter case, exemplified by the Bulgarian National Bank, Hong Kong and Latvia, the local currency is backed at a fixed rate by the central bank's holdings of a foreign currency. Similar to commercial banks, central banks incur liabilities. Central banks create money by issuing interest-free currency notes and selling them to the public in exchange for interest-bearing assets such as government bonds.
When a central bank wishes to purchase more bonds than their respective national governments make available, they may purchase private bonds or assets denominated in foreign currencies. The European Central Bank remits its interest income to the central banks of the member countries of the European Union; the US Federal Reserve remits all its profits to the U. S. Treasury; this income, derived from the power to issue currency, is referred to as seigniorage, belongs to the national government. The state-sanctioned power to create currency is called the Right of Issuance. Throughout history there have been disagreements over this power, since whoever controls the creation of currency controls the seigniorage income; the expression "monetary policy" may refer more narrowly to the interest-rate targets and other active measures undertaken by the monetary authority. Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. Unemployment beyond frictional unemployment is classified as unintended unemployment.
For example, structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Macroeconomic policy aims to reduce unintended unemployment. Keynes labeled any jobs that would be created by a rise in wage-goods as involuntary unemployment: Men are involuntarily unemployed if, in the event of a small rise in the price of wage-goods to the money-wage, both the aggregate supply of labour willing to work for the current money-wage and the aggregate demand for it at that wage would be greater than the existing volume of employment.—John Maynard Keynes, The General Theory of Employment and Money p11 Inflation is defined either as the devaluation of a currency or equivalently the rise of prices relative to a currency. Since inflation lowers real wages, Keynesians view inflation as the solution to involuntary unemployment. However, "unanticipated" inflation leads to lender losses as the real interest rate will be lower than expected.
Thus, Keynesian monetary policy aims for a steady rate of inflation. A publication from the Austrian School, The Case Against the Fed, argues that the efforts of the central banks to control inflation have been counterproductive. Economic growth can be enhanced by investment such as more or better machinery. A low interest rate implies that firms can borrow money to invest in their capital stock and pay less interest for it. Lowering the interest is therefore considered to encourage economic growth and is used to alleviate times of low economic growth. On the other hand, raising the interest rate is used in times of high economic growth as a contra-cyclical device to keep the economy from overheating and avoid market bubbles. Further goals of monetary policy are stability of interest rates, of the financial market, of the foreign exchange market. Goals cannot be separated fr
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands to further European integration. On 9 -- 10 December 1991, the same city hosted the European Council; the treaty founded the European Union and established its pillar structure which stayed in place until the Lisbon Treaty came into force in 2009. The treaty greatly expanded the competences of the EEC/EU and led to the creation of the single European currency, the euro; the Maastricht Treaty reformed and amended the treaties establishing the European Communities, the EU's first pillar. It renamed European Economic Community the European Community, to reflect its expanded competences beyond economic matters; the Maastricht Treaty created two new "pillars" of the EU on Common Foreign and Security Policy and Cooperation in the Fields of Justice and Home Affairs, which replaced the former informal intergovernmental cooperation bodies named TREVI and European Political Cooperation on EU Foreign policy coordination.
The Maastricht Treaty and all pre-existing treaties, has subsequently been further amended by the treaties of Amsterdam and Lisbon. Today it is one of two treaties forming the constitutional basis of the European Union, the other being the Treaty on the Functioning of the European Union. While the current version of the TEU entered into force in 2009, following the Treaty of Lisbon, the older form of the same document was implemented by the Treaty of Maastricht; the signing of the Treaty of Maastricht took place in Maastricht, Netherlands, on 7 February 1992. The Dutch government, by virtue of holding Presidency of the Council of the European Union during the negotiations in the second half of 1991, arranged a ceremony inside the government buildings of the Limburg province on the river Maas. Representatives from the twelve member states of the European Communities were present, signed the treaty as plenipotentiaries, marking the conclusion of the period of negotiations. Only three countries held referendums.
The process of ratifying the treaty was fraught with difficulties in three states. In Denmark, the first Danish Maastricht Treaty referendum was held on 2 June 1992 and ratification of the treaty was rejected by a margin of 50.7% to 49.3%. Subsequently, alterations were made to the treaty through the addition of the Edinburgh Agreement which lists four Danish exceptions, this treaty was ratified the following year on 18 May 1993 after a second referendum was held in Denmark, with legal effect after the formally granted royal assent on 9 June 1993. In September 1992, a referendum in France only narrowly supported the ratification of the treaty, with 50.8% in favour. This narrow vote for ratification in France, known at the time as the ‘petite oui’, led Jacques Delors to comment that,'Europe began as an elitist project in which it was believed that all, required was to convince the decision-makers; that phase of benign despotism is over.' Uncertainty over the Danish and French referendums was one of the causes of the turmoil on the currency markets in September 1992, which led to the UK pound's expulsion from the Exchange Rate Mechanism.
In the United Kingdom, an opt-out from the treaty's social provisions was opposed in Parliament by the opposition Labour and Liberal Democrat MPs and the treaty itself by the Maastricht Rebels within the governing Conservative Party. The number of rebels exceeded the Conservative majority in the House of Commons, thus the government of John Major came close to losing the confidence of the House. In accordance with British constitutional convention that of parliamentary sovereignty, ratification in the UK was not subject to approval by referendum. Despite this, the British constitutional historian Vernon Bogdanor suggests that there was “a clear constitutional rationale for requiring a referendum” based on the allocation of legislative power; the TEU entered into force on 1 November 1993. Treaties amending the TEU: Treaty of Amsterdam Treaty of Nice Treaty of Lisbon The treaty led to the creation of the euro. One of the obligations of the treaty for the members was to keep "sound fiscal policies, with debt limited to 60% of GDP and annual deficits no greater than 3% of GDP".
The treaty created what was referred to as the pillar structure of the European Union. The treaty established the three pillars of the European Union—one supranational pillar created from three European Communities, the Common Foreign and Security Policy pillar, the Justice and Home Affairs pillar; the first pillar was where the EU's supra-national institutions—the Commission, the European Parliament and the European Court of Justice—had the most power and influence. The other two pillars were more intergovernmental in nature with decisions being made by committees composed of member states' politicians and officials. All three pillars were the extensions of existing policy structures; the European Community pillar was the continuation of the European Economic Community with the "Economic" being dropped from the name to represent the wider policy base given by the Maastricht Treaty. Coordination in foreign policy had taken place since the beginning of the 1970s under the name of European Political Cooperation, first written into the treaties by the Single European Act but not as a part of the EEC.
While the Justice and Home Affairs pillar extended cooperatio
Danmarks Nationalbank is the central bank of the Kingdom of Denmark. It is a non-eurozone member of the European System of Central Banks. Since its establishment in 1818, the objective of the Nationalbank as an independent and credible institution is to issue the Danish currency, the krone, ensure its stability; the Board of Governors holds full responsibility for the monetary policy. The building which houses the bank's headquarters was designed by the renowned architect Arne Jacobsen, in collaboration with Hans Dissing and Otto Weitling. After Jacobsen's death, his office, renamed Dissing+Weitling, has brought the construction to completion. Danmarks Nationalbank undertakes all functions related to the management of the Danish central-government debt; the division of responsibility is set out in an agreement between the Ministry of Finance of Denmark and Danmarks Nationalbank. Danish and Faroese banknotes are printed at Danmarks Nationalbank's Banknote Printing Works; this ended 20 December 2016, the printing of banknotes has been outsourced due to less demand for cash, cut in expenses of 100 million kroner until 2020.
The bank was established on 1 August 1818 by King Frederick VI of Denmark. The private bank was given a 90-year monopoly on currency issue, extended in 1907 out to 1938. In 1914, the National Bank became the sole banker for the Danish government; the bank became independent of the government in 1936. The Board of Governors consists of three members; the Chairman of the Board of Governors is Governor by Royal Appointment. The two other Governors are appointed by the Board of Directors. List of Royal Governors 1818-1818: Christian Klingberg 1835-1856: Lauritz Nicolai Hvidt 1821-1861: Nicolai Aagesen 1836-1845: Peter Georg Bang 1856-1861: Hans Peter Hansen 1861-1892: Moritz Levy 1868-1888: Wilhelm Sponneck 1869-1896: Stephan Linnemann 1873-1887: W. J. A. Ussing 1873-1896: F. C. Smidt 1887-1888: Carl Vilhelm Lange 1896-1913: Søren Christian Knudtzon 1888-1913: Rasmus Strøm 1896-1906: Johannes Nellemann 1907-1924: Jens Peter Winther 1908-1908: Ole Hansen 1908-1920: Johannes Lauridsen 1913-1939: Westy Stephensen 1914-1923: Marcus Rubin 1914-1924: Carl Ussing 1920-1923: Jens Peter Dalsgaard 1923-1931: Holmer Green 1923-1936: Hans Rosenkrantz 1924-1932: Jakob Kristian Lindberg 1925-1936: Frederik Carl Gram Schrøder 1935-1955: Ove Jepsen 1936-1949: C.
V. Bramsnæs 1939-1957: Henning Haugen-Johansen 1949-1950: Holger Koed 1950-1963: Svend Nielsen 1956-1963: Siegfried Hartogsohn 1957-1985: Frede Sunesen 1963-1985: Svend Andersen 1965-1994: Erik Hoffmeyer 1980-1996: Ole Thomasen 1982-1990: Richard Mikkelsen 1991-2005: Bodil Nyboe Andersen 1995-2010: Jens Thomsen 1996-2011: Torben Nielsen 2005-2013: Nils Bernstein 2011-: Per Callesen 2011-: Hugo Frey Jensen 2013-: Lars Rohde The official logo of the bank is a nineteenth-century version of Denmark's coat of arms showing the insignia of Denmark and Holstein; the two latter provinces were lost in the 1864 Second War of Schleswig, the bank is the only official Danish institution still using this insignia. Since the late 19th century, coins minted by the bank carry a heart-shaped mint mark. Before this time, the Mint used a mark showing the royal crown. Economy of Denmark Economy of the Faroe Islands Economy of Greenland Economy of Europe Financial Supervisory Authority Payment system Real-time gross settlement Official website
The euro is the official currency of 19 of the 28 member states of the European Union. This group of states is known as the eurozone or euro area, counts about 343 million citizens as of 2019; the euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is subdivided into 100 cents; the currency is used by the institutions of the European Union, by four European microstates that are not EU members, as well as unilaterally by Montenegro and Kosovo. Outside Europe, a number of special territories of EU members use the euro as their currency. Additionally, 240 million people worldwide as of 2018 use currencies pegged to the euro; the euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.
S. dollar. The name euro was adopted on 16 December 1995 in Madrid; the euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit at a ratio of 1:1. Physical euro coins and banknotes entered into circulation on 1 January 2002, making it the day-to-day operating currency of its original members, by March 2002 it had replaced the former currencies. While the euro dropped subsequently to US$0.83 within two years, it has traded above the U. S. dollar since the end of 2002, peaking at US$1.60 on 18 July 2008. In late 2009, the euro became immersed in the European sovereign-debt crisis, which led to the creation of the European Financial Stability Facility as well as other reforms aimed at stabilising and strengthening the currency; the euro is managed and administered by the Frankfurt-based European Central Bank and the Eurosystem. As an independent central bank, the ECB has sole authority to set monetary policy; the Eurosystem participates in the printing and distribution of notes and coins in all member states, the operation of the eurozone payment systems.
The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, although not all states have done so. The United Kingdom and Denmark negotiated exemptions, while Sweden turned down the euro in a 2003 referendum, has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. Since 1 January 2002, the national central banks and the ECB have issued euro banknotes on a joint basis. Euro banknotes do not show. Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated; the ECB issues 8% of the total value of banknotes issued by the Eurosystem. In practice, the ECB's banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB; these liabilities carry interest at the main refinancing rate of the ECB.
The other 92% of euro banknotes are issued by the NCBs in proportion to their respective shares of the ECB capital key, calculated using national share of European Union population and national share of EU GDP weighted. The euro is divided into 100 cents. In Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage. Otherwise, normal English plurals are sometimes used, with many local variations such as centime in France. All circulating coins have a common side showing the denomination or value, a map in the background. Due to the linguistic plurality in the European Union, the Latin alphabet version of euro is used and Arabic numerals. For the denominations except the 1-, 2- and 5-cent coins, the map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 the old map is being replaced by a map of Europe showing countries outside the Union like Norway, Belarus, Russia or Turkey.
The 1-, 2- and 5-cent coins, keep their old design, showing a geographical map of Europe with the 15 member states of 2002 raised somewhat above the rest of the map. All common sides were designed by Luc Luycx; the coins have a national side showing an image chosen by the country that issued the coin. Euro coins from any member state may be used in any nation that has adopted the euro; the coins are issued in denominations of €2, €1, 50c, 20c, 10c, 5c, 2c, 1c. To avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands and Ireland and in Finland; this practice is discouraged by the Commission, as is the practice of certain shops of refusing to accept high-value euro notes. Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin; these include both issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, nationally i