5/9: Euros

[Undertoad]

The first Euro coins are being minted and 12 out of the 15 EU nations are going to replace their money with these on Jan 1, 2002.

Remarkably, they have only 2 months to circulate both their own currencies and the euros. So by the end of February, 12 world currencies are going to disappear.

I know the UK pound is going to remain but I don't know who the other naysayers are. The French franc, the German mark, the Italian lire, the Spanish peseto, all are going the way of the dodo bird.

The Brits might be out because the pound has stronger backing, but they might also be gun-shy because it was only a few decades ago that they went through a currency change - decimalization. They lost the shiling and sixpence notes and their "penny" changed in value which was fairly traumatic. Can you image a US cent being suddenly worth something other than a cent? Any confusion like that breeds temporary inflation as there is confusion over the worth of money.

In the long run I would expect that the sudden ability to trade without an exchange rate will have the opposite effect on Europe. No exchange rate at all, they will have an understanding of the worth of the euro that crosses borders.

[tw]

Originally posted by Tony Shepps
The first Euro coins are being minted and 12 out of the 15 EU nations are going to replace their money with these on Jan 1, 2002.

As a result money laundering has entered high gear as corrupt cash flow must be converted to other currencies (such as the dollar) so that they don't have to take their illegally earned cash to the bank for Euros.

This is a great time to go after and identify those money launders. The US, under Clinton, had identified and listed countries and banks suspected of laundering. Republicans pressured to stop this - it is a long article in The Economist. Now the Bush administration has put everything on hold.

A common technique is to use banks overseas partners. IOW to find the money originally transfers out of NYC to a parnter bank first in Belguim, then in Cayman Island, then Bermuda... eventually the investigators found the money still back in NYC - but only after fighting uncooperation from Cayman Islands and even worse Bermuda. Other uncooperative nations include Russia, many of the Pacific Ocean countries, and a few allies. As noted, the Bush administration has suspended pressure on these banks to cooperate with investigators.

[Chewbaccus]

If memory serves, the Euro still varies in value from country to country, correct? For example, 6 French euros are equivalent to one American dollar, but one American dollar is also equivalent to (at last check) 1000+ Italian euros.

Is this still the case, or have they streamlined the thing to the point where the EU is economically one big country?

~Mike

[tw]

Originally posted by Chewbaccus
If memory serves, the Euro still varies in value from country to country, correct? For example, 6 French euros are equivalent to one American dollar, but one American dollar is also equivalent to (at last check) 1000+ Italian euros.

You are confusing Euro with the Mark, Lira, Franc, etc. They are different currencies. The Dollar today buys 1.11 Euros; up from last years 1.08 Euros (Euro has lost value by 2.8%). The Dollar buys 2.18 German Marks; up from 2.12 - about the same or 2.8% difference. Italian Lira at 2158 dropped 2.9%.

All European currencies that will be traded for Euros were expected to remain consistent within certain parameters to qualify for the transistion. Most are in the 2.7 to 3.0% range vs the DollarUS. However the Netherlands Guilder has only dropped 1.2% being as Netherlands and its more tolerant attitudes have resulted in a Europe most prosperous economy. European currencies that are not converting such as the Danish (whatever it was) have dropped by over 3% compared to the DollarUS; the Sterling Pound dropped 9.5%.

IOW the Euro and other European currencies are completely independent. What is changing is some currencies such as the Greek Dracma - I believe the world's oldest currency - will no longer exist after the transistion.