Euro

July 20, 2022

We are gradually preparing for a trip to Europe this fall.  I say gradually because we have already been collecting things for two months and we still have a way to go to be complete.  Luckily, we had both renewed our passports several years ago so that was not a rush.  Many of the other items I never knew I needed.  Melissa has been talking with my sister and she has been providing tips to make travel easier.  We decided to travel light with only a carry on, but that means we need to pack wisely.  I have small bottles of over the counter medications (aspirin, acetaminophen, etc.), easy wash and dry clothes items, and compression bags to separate different types of things.  We checked to make sure our phone plan is covered for overseas and got the proper plug adaptors for charging.  The biggest difference was financial.  We have already paid for most things on the guided tour, but there will be other expenses.  That meant getting a credit card that does not charge foreign transfer fees.  While we were told it was not necessary, we also decided to take some foreign currency.  All the areas we are going use the euro.

When I looked online, I found the euro is the official currency of 19 out of the 27 member states of the European Union (EU) called the eurozone.  The name euro was officially adopted on December 16, 1995.  The euro is also used by the institutions of the EU, by four European microstates that are not EU members, the British Overseas Territory of Akrotiri and Dhekelia, unilaterally by Montenegro and Kosovo, and outside Europe by several special territories of EU members.  The euro is the second-largest reserve currency as well as the second-most traded currency in the world after the US dollar, and one of the highest combined values of banknotes and coins in circulation in the world.  The euro was introduced to world financial markets as an accounting currency on January 1, 1999, replacing the former European Currency Unit.  Physical euro coins and banknotes entered circulation on January 1, 2002, making it the day-to-day operating currency of its original members.  By March 2002 it had completely replaced the former currencies.

The most obvious benefit of adopting a single currency is to remove the cost of exchanging currency, theoretically allowing businesses and individuals to complete previously unprofitable trades.  For consumers, banks in the eurozone must charge the same for intra-member cross-border transactions as purely domestic transactions for electronic payments (credit cards, debit cards, and ATM withdrawals).  Between December 1999 and December 2002, the euro traded below the US dollar, but since has traded at or above the US dollar.  The euro peaked on July 18, 2008, at US$1.60 but has since returned to near its original issue rate.  On July 13, 2022, the two currencies hit parity for the first time in nearly two decades due in part to the 2022 Russian invasion of Ukraine.  While the exchange rate will fluctuate, this makes it easier for me to consider the value of the euro to be that of the US dollar when I buy things on our trip.

Thoughts:  When I picked up our euro notes from the bank last night, I did not pay them much attention.  Melissa also purchased notes for my brother and his wife who will be on the trip with us.  When I got the notes out to divide them today, I noticed how small the euro is compared to a US dollar.  I also saw what appeared to be two different designs for the note.  I contemplated keeping the more colorful notes and giving the drab ones to my brother.  Then I flipped a note over and realized the drab was the backside of the same euro.  I was impressed by the first impression the colorful euro made but did not care for the drab euro.  The first impression another person makes is usually based on appearance, and often only on a limited set of characteristics.  When we base our likes and dislikes on how you dress, your hair style, or color of skin it is easy to get the wrong impression.  Sometimes you need to flip your viewpoint to understand we are more the same than different.  Act for all.  Change is coming and it starts with you.