Why does the historical data on FX_IDC:EURUSD chart go to 1971?

On the EURUSD currency pair chart on TradingView the historical data starts in 1971 which often surprises users who remember that the euro as a currency was introduced into non-cash circulation on January 1, 1999, and then, 3 years later, banknotes and coins appeared. However, the historical data on the chart is legitimate and completely accurate, as the euro replaced the European Currency Unit (ECU) that existed between 1979 and 1998 in the 1:1 ratio. The name is derived from the European Currency Unit and the medieval French coins called ecu.

The ECU is not the first attempt to create a single European currency. In 1958, following the formation of the European Union, the countries that joined it established a special regime for the functioning of currencies which implied greater mutual discipline than was established within the framework of the International Monetary Fund for all member states of this international organization. Unlike all other IMF member countries which allowed national currencies to deviate from parity to the US dollar within ±1%, the six Common Market countries agreed to limit fluctuations in their currencies within ±0.75%. On December 18, 1971, in Washington, a group of 10 states concluded the Smithsonian Agreement, according to which the nominal values of many currencies were changed, and most importantly, the limits for currency fluctuations were increased to 2.25% in both directions, thus ensuring the maximum possible fluctuation (4.5%). This became known as the currency tunnel.

In 1972 in Basel, 6 out of 9 European Union countries signed an agreement to reduce the limits of currency fluctuations in both directions from the established fixed parity by half which in turn became known as the snake in the tunnel or ECS which stands for the European Currency Snake. The fluctuations of the European currencies of the countries participating in the signing of this agreement make up the historical data on the TradingView charts until 1975.

1975 was the year of the creation of the European unit of account, bearing the EUA abbreviation from the European Unit of Account. It operated until 1978 and was replaced by the ECU mentioned at the very beginning at a rate of 1:1.

In other words, the chronology of the development of the European currency looks like this:

  • from 1999 to the present day - euro
  • 1979-1998 - ECU (European Currency Unit)
  • 1975-1978 - EUA (European Unit of Account)
  • 1971-1974 - ECS (European Currency Snake)