The European Union is an economic community comprising most of Europe. Its main feature is a free market among its member states...no tariffs, no passports, free transport of goods across country borders.
It also represents a (relatively weak) political organization. The member countries remain sovereign nations, but there is a European Parliament, and the EU collects its own taxes, especially the so-called VAT tax. That name sounds like a Hungarian mispronouncing something ("that tax," perhaps), but it stands for "value-added tax" and works kind of like a sales tax.
Meanwhile, many EU countries also belong to the Eurozone, or the group of countries that use the Euro as their currency. However, there are a handful of countries that belong to the EU but don't use the euro.
The EU developed over a long period of time. It started in the 1950s with a series of relatively limited trade treaties (the first steps focused on steel and coal). In 1957, six Western European countries (France, Belgium, Italy, the Netherlands, West Germany, and Luxembourg...you never want to leave out Luxembourg) signed the Treaty of Rome, which set up the European Economic Community (later the European Community), a precursor to the EU.
The European Union itself was created by the Maastricht Treaty (sounds like a Hungarian sneezing), which took effect in 1993. The organization has been developing ever since, through a series of subsequent treaties and the joining of additional nations.
As of 2019, the EU comprised most of Europe west of Russia (which is not a member). Notable exceptions include Switzerland, Norway, and Ukraine, which aren't in the EU either. Some other countries are considered candidates for membership, but have not been accepted yet. This list includes nations like Serbia and Turkey.
And then there's the U.K. A long-time member of the EU, voters in the U.K. narrowly supported a special referendum to leave the pan-European economic zone in 2016. As of March 2019, the U.K. remains in the final negotiations (a nice way of saying "panicked flailings") to leave the EU.
Related or Semi-related Video
Econ: What is the European Monetary Syst...7 Views
and finance Allah shmoop What is the European monetary system
Or to put it another way where do euros come
from Most currencies cover a single country like the U
S Has the dollar The U K has the pound
of Zambia has the kwacha and so on But one
of the world's major currencies covers an entire region the
euro It's used in twenty three countries throughout Europe nineteen
countries within the European Union and four small ones outside
of the official U from France and Germany to Slovakia
and Luxemburg That's where the euro plays in the sun
When James Bond plays baccarat in Monaco he places his
bets in euros When the Knights of Malta get their
armor repaired well they pay in euros by castle in
France are Chocola in Belgium or sauerkraut in Germany or
whatever it is they eat in Portugal Yeah you're using
euros Despite the fact that it's one of the world's
widest circulating currencies the euro is actually one of the
youngest It hasn't been around for a very long and
by not around that long while we mean like it
wasn't here in the nineteen nineties So while friends dominated
TV and flannel shirts dominated fashion and Britney Spears dominated
TRL while Europe was dominated by a patchwork of currencies
France had the Frank Germany had the deutschmark Italy had
the lira in Zambia still had the kwacha well the
countries of the eurozone didn't exactly have smooth courtship In
fact they marked the first couple of decades of the
twentieth century with the biggest wars in history up to
that point and then ended the century there with a
common currency So how did they do this Well quick
timeline From nineteen fourteen to nineteen eighteen most of the
countries of Europe fought against each other in World War
I In the nineteen twenties Germany suffered through a massive
inflation and a painful political dislocation brought on by their
defeat in the war Other countries faced their own traumas
Fascism rampant in Italy paranoia and political division in France
By the nineteen thirties that continent suffered through the ravages
of the Great Depression and the rise of the Nazis
From nineteen thirty nine to nineteen forty five another war
Well this one was worse than the previous one That
conflict WW two left Everyone in Europe bombed out and
broke the center of the world economy then shifted to
the United States Meanwhile Europe split into spheres of influence
US dominated area in the West and the communist U
S S R dominated the area in the east So
for half a century or so an unending stream of
wars economic dislocation rivalry and while political confrontation marked relations
on the continent hardly a place ripe for currency unification
So what happened Well here's the short answer Eastern Europe
started instituting more socialist economic policies right after World War
Two Meanwhile the Western countries especially France the UK and
what was then known as West Germany started opening up
trade in a new series of treaties from the nineteen
fifties In the nineteen nineties the nations of Europe stopped
being openly compay edited Justus They were adding expensive social
programs Meanwhile the larger economies experienced an influx of these
huge migration policy issues The migrants came from other European
countries and largely from former colonies in Asia and Africa
will eventually none of the major European countries could really
afford to operate individually and by the late nineteen eighties
the governments of the communist countries in Eastern Europe started
to collapse The new regimes in these former Iron Curtain
nations looked to join the growing European wide market East
and West Germany reunited The former communist countries entered the
trade treaties The European Union became one of the world's
key economic organizations Pressure for a single currency began to
grow well in nineteen ninety to the members of the
European Community signed a treaty that pave the way for
a single currency A series of treaties followed until the
euro was introduced on January first nineteen ninety nine and
by two thousand two the first countries had completed a
changeover from their previous currencies Lesson here Don't LOSE HOPE
ONE DAYS Great war can become tomorrow's free trade Unified
currency zone Well a single Middle East currencies that ever
coming India Pakistan Trade Zone A gift card that works
at both Yankee Stadium and Fenway Park Yeah you never
know In a few decades maybe
Up Next
What is LIBOR? LIBOR is an acronym for the London Interbank Offered Rate. It is the most widely referenced benchmark for short term loans used by f...