On Jan 1st 1999 a new currency was officially born: the Euro.  It was the result of the efforts of most members of the European Union aiming to create a single currency to foster growth in the area, be strong against market storms and cut down on banking costs.  That day the exchange rate with respect to the 11 initial participating currencies was set in stone and the European Central Bank took control.  For three years the Euro remained something untangible, but on Jan 1st 2002 actual coins and notes were circulated and the now obsolete national money retired.

I remember that day when we started to convert our money.  Paying in Lira and getting back change in Euro was a little mess but also fun.  Luckily enough the confusion only lasted for one month and then almost everybody was quickly up to speed doing math with the new coins.  Due to the roundings and the psychological effect there’s been a period of hidden inflation, with prices rounded up but then our economy became stronger and the inflation was kept very low.  People was able to get loans as low as 2.5% interest rate, something unheard of in this part of the world.

Initially the Euro was weak, declining from $1.16 down to $0.82, but soon after that it started a slow but steady recovery that this year culminated in a peak at $1,60.  Even during the current credit crunch crisis, our currency is stable.  Nations like Sweden, Denmark and The United Kingdom chose to stay out of the game to maintain control over their own monetary policy but now they are changing their minds, as they see their currency plunge.  The British Pound in particular is sinking quickly and almost down to parity.  More countries, especially in the Eastern Europe are now trying to join the club and don’t forget the Euro is now popular even in New York.  All in all we can certainly say the Euro delivered.

I’ve never been so happy to live in the Eurozone!

So far the US Dollar has been the undisputed king of the currencies. A $100 bill worked like a passport in many countries of the world and dollars were used as the mandatory currency for international transactions in some markets. At the same time, when foreigners had to go the the States they always had to exchange their money because – Canadian and Mexican borders excepted – nobody would accept foreign money in American shops.

By the way, every time I’ve been to New York I have been disappointed by how few and how crappy ATMs and exchange counters there were between Customs and the Taxi station of Delta’s terminal at JFK. Didn’t they think of the just-landed foreigners having to pay $45+toll cash for a cab to Manhattan?

Anyhow, things are quickly changing now. Dollars fell 15% in the last year compared to the the rest of the world and tourists (Europeans in particular) are visiting the States and shopping like crazy. For this reason more and more shops in Manhattan are displaying “We accept Euro” tags. Stuff there is now so cheap that last time I felt like I had to buy something, because it was a shame to come back home with spare room in my luggage. Eventually, I bought a 250G portable USB hard drive. Friends in Italy also asked me to carry something for them.

Because of their crappy pricing policy (or should I call it a rip-off?) Apple products are even cheaper. Apple apparently doesn’t know how to apply exchange rates. I mean, a Macbook Air is 1799$ in the USA and €1699 ($2497) in Europe. No wonder there are people who fly to the States just to carry back a couple of macs and sell them to friends. Their flight is paid by Apple. It’s called arbitrage.

Americans are now very worried of their money. Friends in New York kept on talking on how lucky I was, how much the dollar was falling, how I should invest my money by buying some real estate in New York because flats in Manhattan are a bargain nowadays and so forth. I was shocked. Euro money is now trendy! Next time I’m going to try to pay drinks in Euros in one of those coll rooftop bars, just to see how they’d take it.