Sunday, 11 March 2012

The Amazing Race 20, Episode 4

Asunción (Paraguay) - Turin (Italy)

Ten years of Euros

The most difficult challenge for the teams on The Amazing Race 20 this week in Turin was a clue in the form of an Italian 2-euro-cent coin, which they had to figure out meant they were supposed to find their next clue at the top of the Mole Antonelliana, the tower in the center of Turin depicted on the coin.

On the 10th anniversary of the introduction of the euro currency at the start of 2002, and with the euro figuring in both the news and "The Amazing Race", it's a good time to take a look at what travellers need to know about the euro, whether or not you are going to Europe.

What are euro coins and bills (paper notes) like? Where is the euro used, and where isn't it? How much is it worth? Should I care about the euro if I'm not travelling to Europe? And what do you mean by an "Italian" euro-cent coin? Are there different euros in different countries?

To answer the last question first: You can use any euro coins or paper money anywhere euros are accepted, just as you can use any of the various designs of US coins or paper money anywhere dollars are legal tender. But there are some minor variations in the designs on the coins.

All euro paper money ("bills" in US usage, "notes" in typical British and international usage) is the same throughout the euro zone. Euro notes are scrupulously country and language neutral, with the the denomination in numbers only, the neologism "euro" in both the Latin and Greek alphabets, no words in any other language, and images of imaginary Greco-Roman or modern structures that carry no specific indicia of association to any particular European country or culture.

Euro coins of each denomination are of standard size, shape, and color, and have one standard face. But what's depicted on the other side of each coin varies, with each country that adopts the euro free to choose a different symbol for the reverse side of each euro coin denomination. Some countries put the face of their king or queen on their euro coins, while others use various symbols of national identity and pride, including real mountains, buildings, and ruins.

Some countries use the same image on euro coins of all denominations, while others use different images on the different values of euro coins. All told, there are about as many designs for the reverse sides of euro coins as there are designs of US quarter dollars currently being minted -- with about as much, or as little, significance, since the different designs all have the same value and all circulate, once issued, throughout the euro zone.

There are also, as in the US, various limited-edition euro-denominated "commemorative" coins, such as this German 10-euro coin (scroll down on the page) to commemorate the 100th anniversary of the opening of the world's first youth hostel.

The more important thing for travellers accustomed to US dollars to keep in mind about euro coins is that they are issued in denominations up to two euros. That's currently a little more than US$2.55, or more than 10 times the value of the largest US coin in everyday usage. There are no bills for any denomination smaller than five euros. So a pocketfull of euro change that you think of as being worth perhaps a few dollars can easily be worth a few tens of dollars. The same is true in many other countries: Canada, for example, has completely replaced dollar bills with "loonie" (C$1, so-called because it has a picture of a loon) and "toonie" (C$2) coins.

One euro, by the way, is divided into 100 euro cents. The term "cent" seems to have been accepted across languages and throughout the euro zone, although occasionally you'll hear a euro cent referred to colloquially by whatever term was used to refer to the smallest unit of the former national currency, such as "penny" or "centime".

The three-letter ISO currency code for the euro is, unsurprisingly, "EUR".

The European Central Bank says that as the name of the currency "euro" isn't supposed to be capitalized, that the euro symbol is supposed to be placed before the numeric amount (as is the custom with the US dollar symbol, "$"), and that "euro" is always singular -- nobody is ever supposed to say, "five euros". In practice, bankers in Frankfurt don't own people's tongues or pens. Most Europeans seem to follow whatever was the standard usage on each of these points with their former national currency. You'll hear and see "€5" or "5€", "Euro" or "euro", and "five euros" or "five euro", interchangeably, depending on where you are.

The euro is the official currency in many, but not all, of the countries of the European Union. The euro is issued and administered by the European Central Bank, which in turn is largely controlled, under a system of voting weighted by contributions to the ECB reserve fund, by Germany and to a lesser extent France. Having German bankers hold Europe's pursestrings pleases neither Germans nor anyone else in Europe, perhaps least of all the French who have to play second fiddle. That's part of the subtext to the current negotiations over whether to bail out the Greek government, and if so who will foot the bill.

Within the euro zone, it's become extremely rare to see any mention of the former national currencies. But that doesn't mean that the euro is now the only currency anywhere in Europe. The euro zone has expanded since the introduction of the euro a decade ago, as has the European Union over the same time. Some of the countries of "New Europe", such as Slovenia and Estonia, have joined both the EU and the euro zone. But many members of the expanded EU in central Europe (east of the pre-1989 "Iron Curtain") have not yet met the economic qualifications for inclusion in the euro zone.

of the ocuntries of "OLd Europe", the United Kingdom (which continues to use the British Pound, GBP), Sweden (Swedish Kroner, SEK), and Denmark (Danish Kroner, DKK) are members of the EU and could have joined the euro zone, but for different reasons have chosen to retain their national currencies rather than submit to ECB rules that would have limited their economic sovereignty.

And Norway (which uses the Norwegian Kroner, NOK) and Switzerland (which uses the Swiss Franc, CHF), have chosen neither to join the EU nor to adopt the euro.

The euro isn't just a European currency. It's not yet a match for the US dollar, but in recent years I've seen or heard prices in euros, especially for tourist goods and services like hotels, in countries in Africa, Asia, and even (although rarely) South America. It's not always possible to predict where prices will be in euros (if they aren't specified in local currency), where they will be in US dollars, and where (much more rarely) they will be in some other "hard" currency, such as South African Rands (ZAR) in other countries of southern Africa.

So it's useful to have enough of a sense of the current exchange rate of the euro that you can evaluate a price you are offered for a souvenir in a souk in Morocco, a set of tea-glasses in a Turkish bazaar, or a hotel in Hama -- without having to reveal your ignorance of local prices, and reduce your bargaining power, by asking, "How much is that in US dollars?"

Should travellers be worried about the euro crisis precipitated by the possibility of Greek government default on its euro-denominated bonds (the European counterpart of the bursting of the US real estate debt bubble)? If you own a vacation home in Euro-land or your salary or pension or investments are denominated in euros, perhaps yes. If your only euro holdings are a couple of hundred euros in cash left over from your last trip, there's no reason to rush out to convert them to US dollars (which, in any event, many people consider to be even more overvalued and burdened by sovereign debt). Leave your euros safely stashed away for use on your future travels.

When I was in Ireland in early 2002, just a few months after the introduction of the euro, one euro was worth significantly less than one US dollar. That lasted only a few months, and since the start of 2004 the "interbank" value of the euro has ranged between US$1.18 and US$1.58.

That doesn't mean that prices are necessarily higher if they are specified in euros, or that prices in the euro zone are necessarily higher than in places that use other currencies. Within Europe, non-euro Switzerland is as expensive and, I would argue, worse value for the money than anywhere I've been in euro-land. And if travel can often be a bit cheaper in the UK than in euro countries across the channel, I suspect that's more because of an infrastructure of backpacker and budget tourism (for both thrifty Brits and the large expatriate subculture of young people from Australia, New Zealand, and South Africa on "working holiday" visas) than because the pound is particularly undervalued relative to the euro. There are probably better bargains in some euro countries like Portugal and perhaps in Greece than in non-euro Britain.

And while the euro has had its ups and downs against the US dollar and other currencies, the variations in euro exchange rates have never been enough to offset the differences, for Americans or for Europeans, between the costs of travel in the US or anywhere in Europe and the costs in other poorer and therefore cheaper parts of the world.

Link | Posted by Edward on Sunday, 11 March 2012, 23:59 (11:59 PM) | TrackBack (0)
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