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Questions from a financially illiterate: does the switch to Euros carry any disadvantages to average Croatian citizens? I could be wrong but I seem to remember

Questions from a financially illiterate: does the switch to Euros carry any disadvantages to average Croatian citizens? I could be wrong but I seem to remember other EU countries like the Czechs, Sweden and Denmark intentionally avoiding the switch to Euro despite being eligible, and from some articles I read recently, other countries like Finland and Netherlands regretting the switch from their currency as they don't want to have to suffer the proposed persistent high inflation and be punished for being financially responsible in order to help countries like Greece or Italy pay their huge debt. Also, an older Italian gentleman I spoke to once told me that after their switch to Euros, their prices shot up but wages didn't. Curious how true this is and if the same could happen in Croatia. Does having control of your own currency that's not pegged to the USD/Euro carry any advantages anymore if you're not someone like China ar is it pointless now?

wheels 4y ago
It could. It means that inflation / deflation will be linked to the wider EU economy and not responsive to the particular economic conditions of Croatia. This was a big deal in Greece when inflation would have helped their economy by boosting exports, but was impossible because of being tied to the much stronger economies of Western Europe. There are some advantages to being on the Euro, but macroeonomically, it more benefits large stable countries (which then have an artificially depressed currency) like Germany and France.
- tgv 4y ago
  And since the coin is now tied to the rest of Europe, it becomes more attractive for members from other EU states to buy property in Croatia, or live there as a pensionado. This can drive the (housing) prices upwards.
  - cjbgkagh 4y ago
    The panacea to the worlds economic problems, ever increasing cost of housing.
  - nibbleshifter 4y ago
    Property purchase in Croatia was already extremely easy and attractive.
  - robbintt 4y ago
    On the other hand, Croatians can freely work anywhere in the Schengen area, right? And vice versa to bring jobs to Croatia?
    - mytailorisrich 4y ago
      That is already the case. The right to freely move and work anywhere (not only in the EU but EEA and Switzerland) is not bound to Schengen.
      - robbintt 4y ago
        I see, so this is not related to work.
    - andrepd 4y ago
      So, they can have their qualified youth (educated at Croation expense) go work and pay taxes in Switzerland or the Netherlands or Germany? I fail to see how that's a positive :)
      - Ekaros 4y ago
        That might not be positive. But now there is even less friction with local companies in Croatia selling services to those countries.
        csomar 4y ago
        How will these companies be able to sell services to the Western EU if all the skilled workers moved West? Are they as capitalized as their Western counterparts?
        Ekaros 4y ago
        So no company in USA exist outside the best paying locations as absolutely everyone has moved to best paying richer cities. As have the companies as there is no capitalization in poor regions?
- cm2187 4y ago
  I don't know if I would put France in the stable countries basket. Italy's indebtedness will catch up with them sooner or later. France will likely come shortly after. There are lots of liabilities that come attached to becoming a member of the eurozone. All this debt will have to be inflated away.
europeanguy 4y ago
The meme is that by not having your own currency you have one less emergency measure available to you (devaluing your own currency).
mytailorisrich 4y ago
Immediately it depends on how the exchange rate was fixed, then it will incur rounding effects. Longer term, Croatia will have lost control of its monetary policy but one would expect they reckon they'll gain more from the switch.
- jq-r 4y ago
  > Longer term, Croatia will have lost control of its monetary policy but one would expect they reckon they'll gain more from the switch. You cannot lose something which you don't have. A bit /s, but don't think its much further from the truth.
martythemaniak 4y ago
Before adopting the Euro, countries spend some amount of time in the ERM (Exchange Rate Mechanisms) where the currency is pegged to the Euro. Thus, the actual switch is just a note swap, the actual advantages and disadvantages are already there. The real issue is they lose the ability to issue debts in their own currency and whether that's good or bad depends hugely on individual counties. It has worked well for some, not for others.
- buzzdenver 4y ago
  > The real issue is they lose the ability to issue debts in their own currency and whether that's good or bad depends hugely on individual counties. Having your own currency also allows you to set monetary policy and not just follow the European Central Bank. So in time of financial crisis you can print as much money as you want and fiddle with exchange rates to make your country more competitive.
- Someone 4y ago
  > Thus, the actual switch is just a note swap, the actual advantages and disadvantages are already there. Not quite. When your currency is pegged to the euro, the exchange rate isn’t fixed; you only promise to try and keep it fixed. If that turns out to be impossible (or you don’t want to do it anymore), you can change the exchange rate or decide to stop that pegging. Of course, that you could do that has a price: people will weigh the risk of something like that happening when they invest in your currency. If you join the euro, the exchange rate becomes 100% fixed. Giving up that flexibility removes some uncertainty for investors, and that may be beneficial to you (technically, you could still exit the euro system and reintroduce a national currency, but your national debt and interest payments would still be valued in euros, diminishing the effect you get from getting back your own currency. It also is deeply uncharted territory; I’m not even sure rules for doing it have been made. Markets may judge a move like that similar to how they would judge defaulting on your loans) In some sense, pegging to the euro is the try-out of “what would happen if we joined the euro?”
cjbgkagh 4y ago
It means lower interest rates at the cost of high unemployment, unless you are Germany or some other country with naturally low interest rates. Low interest rates drives up asset prices and assets are owned by the wealthy. Unemployment/underemployment hurts young people the most. Governments can borrow more cheaply and can spend more money on social programs but they also tend to divert it into their own pockets and to the pockets of their backers. When the inevitable crisis hit the countries can’t devalue the debt in response, they instead have to sell national assets.
Beltalowda 4y ago
According to the article: "About 80 percent of bank deposits are denominated in euros and Zagreb’s main trading partners are in the eurozone. Croatians have long valued their most prized assets such as cars and apartments in euros, displaying a lack of confidence in the local currency." So in that sense it's less of a radical change than e.g. Czechia or Sweden, since they primarily use the local currency AFAIK. If you're already half-way using the Euro (kuna is pegged to Euro as well) you might as well join the euro-zone and have some influence.
rsync 4y ago
"... does the switch to Euros carry any disadvantages to average Croatian citizens?" It carries tremendous disadvantages. In fact, I'm quite surprised that at this late date, with a greater understanding of what it means to force your citizens to use the Deutsche Mark, that they have made this decision. With all due respect to Croatia and the lovely people that live there, they cannot compete globally with Germany in any interesting export market. The typical tool that a nation uses to deal with that reality is the relative value of their currency. Consumers of import goods then have a choice to make between German quality and (for instance) Spanish pricing. ... and now that lever will be gone. At this point I think it is fairly well understood what the economic - and social - ramifications of this are and, again, I am actually quite surprised they've made this choice.
- toomuchtodo 4y ago
  It’s a trade off. You give Germany and France more control, but they are incentivized to backstop you. It seems the countries continuing to join the EU understand this and are at peace with it. Tourism is one of the larger sectors in Croatia’s economy, so frictionless travel between them and other EU members is likely worth the arrangement. They also have a floating LNG terminal, very valuable due to recent events. https://www.countryreports.org/country/Croatia/economy.htm https://www.countryreports.org/country/Croatia/economy.htm
  - mytailorisrich 4y ago
    I don't think there is 'Germany and France' anymore these days. There is Germany and their goodwill towards France, if any, [edit:] because all the power and leverage has been with Germany for years now. Recent years have shown that Germany will of course focus on its own interests and policies and ignore France/rest for the EU whenever they deem fit to do so, while France is in a weaker position. At least it used to be that France had military power going for themselves but recent policy changes in Berlin should really and finally set alarm bells ringing in Paris.
    - toomuchtodo 4y ago
johnchristopher 4y ago
[flagged]
- vinay427 4y ago
  This response seems unfair. Not the GP, but to me their question seems in presumably good faith (I’m not sure that asking if there are any disadvantages is a loaded question) and is followed by a description of their understanding clearly wrapped in a disclaimer to avoid simply “parroting” political memes.
  - johnchristopher 4y ago
    Oh, a disclaimer... yeah, that's usually how it works, you play the disclaimer card to candidly disguise your statements as questions. There is no need to repeat the Germany-responsible-greece-lazy idea to ask questions about how adopting the Euro plays out for a given country. I would also point out that Germany is not as responsible as what many people claim considering their little energy problem and the impact it now has on Europe but I am not playing that card.
senko 4y ago
> does the switch to Euros carry any disadvantages to average Croatian citizens? Ignoring temporary inflation due to businesses taking advantage to round things up in Euros, my belief is the switch will be a net positive. Croatia has been already completely tethered to Euro. Kuna was unofficially pegged almost from the start, house and car prices are always quoted in Euros, people's mortgages are calculated in Euros. The "loss" of monetary freedom that comes with not being able to print your own currency is not a loss here because Croatia could in practice never leave the peg, the consequences would be extremely severe. On the other hand, Croatia is a very small country (less than 4m people) and tourism makes up a large portion of the economy. Using Euro removes friction and costs tourists and businesses had having to convert from/to the currency. The removal of the border checks (entering the Schengen, which also happens on Jan 1st) will also help with this. > other countries like Finland regretting the switch from their currency as they don't want to have to suffer sky high inflation and be punished for being financially responsible just to help other countries like Greece or Italy pay their huge debt. Croatia will be a net beneficiary (edited, thx) of EU funds related to the integration processes for at least a couple of years, and is near the rear of the pack in most economic measures.
- McDyver 4y ago
  > Croatia will be a net benefactor of EU funds Do you mean net beneficiary, instead of benefactor?
  - senko 4y ago
    Oops, indeed.
- mmarq 4y ago
  > Ignoring temporary inflation due to businesses taking advantage to round things up in Euros, my belief is the switch will be a net positive. In Italy we’ve been talking about this a lot. Of course there’s no evidence in the data and until last year prices had barely changed since I attended middle school in the mid 90s.
Strom 4y ago
> Denmark intentionally avoiding the switch to Euro Only in name as a PR move. Take a look at the 10 year EUR/DKK conversion chart. [1] The Danish national bank keeps the currency fixed to euro anyway. -- [1] https://www.xe.com/currencycharts/?from=EUR&to=DKK&view=10Y https://www.xe.com/currencycharts/?from=EUR&to=DKK&view=10Y
- boulos 4y ago
  Yeah, Denmark is the wrong example. Sweden is the right one: https://www.xe.com/currencycharts/?from=EUR&to=SEK&view=10Y https://www.xe.com/currencycharts/?from=EUR&to=SEK&view=10Y
- tokai 4y ago
  Nothing to do with a PR move. The voters said no at referendum, regardless of the major parties campaigning for a yes. The infinite peg was just a way to circumvent the result of the public vote.
dns_snek 4y ago
There's a chance that cost of goods and services might significantly increase as businesses exploit unfamiliarity with the new currency. A cup of coffee that costs 15 HRK (2 EUR) today might cost 3 EUR tomorrow. Having said that, it seems like they've foreseen this issue and currently require businesses to display prices in both currencies.
ragebol 4y ago
Being from the Netherlands, I don't think we in majority regret being in the Euro or Schengen. Of course, there's downsides and some people want out, but you'll have those in any country.
InCityDreams 4y ago
>Also, an older Italian gentleman I spoke to once told me that after their switch to Euros, their prices shot up but wages didn't. Curious how true this is and if the same could happen in Croatia. On the euro-conversion day, 1 EUR = 1,936.27 ITLira = 1 Deutschmark (at the time). So, prices went up ie a L1,000 coffee became €1 - it doubled, because a) it was easy and b) people just couldn't be bothered. Businesses had no problem, being bothered, of course - wood from Germany that used to cost DM1,000, now cost €1,000 in Italy when it should have been 1,000/1,936.27 = 516 Euro....but it didn't. I knew a guy that was building a house and it was cheaper to purchase a lot of things from Germany (even with the exchange rates, paperwork etc), and boy did they get burned. Equally, an Italian company they originally called had also doubled their prices, so it would have cost twice as much again to purchase locally. Italy was just the victim of a series of rounding errors, except when it came to wages, as they didn't double. To me, it's just like shopping in the states. A dollar is a dollar, but state, local, county etc taxes sure make it far more interesting than it should be.
- I_AM_A_SMURF 4y ago
  What you're saying doesn't make sense. If prices had actually doubled there would have been a big spike in inflation in Italy around the time of adoption of the Euro, which there wasn't: https://www.macrotrends.net/countries/ITA/italy/inflation-rate-cpi https://www.macrotrends.net/countries/ITA/italy/inflation-ra... This is just an urban myth.
- jaclaz 4y ago
  >On the euro-conversion day, 1 EUR = 1,936.27 ITLira = 1 Deutschmark (at the time). No. 1 Euro=1,936.27 IT Lire 1 Euro= 1.95583 Deutsh Mark Around that time, roughly, the change was 990-1,000 Lire = 1 Deutsch Mark.
andrepd 4y ago
It's definitely not pointless. Consider this: the Eurozone is a monetary union without a fiscal or political union. Its monetary policy is effectively controlled by the biggest economies, particularly Germany. However, countries have drastically different monetary goals, as can be sharply seen in times of crisis, such as the sovereign debt crisis in the 2010s. It's fundamentally impossible to satisfy the goals of Germany and Greece, for example, with a unified currency but no fiscal union (and of course, with no democratic governance).
lucb1e 4y ago
> other countries like Finland and Netherlands regretting the switch Oh man I absolutely do not. This makes life so much easier as a Dutch person. It felt a bit weird and was tricky to deal with and mentally convert Iceland's currency to something that makes sense to me while on holiday last year, or having prices for books and food in a stopover airport to Finland in another random currency despite to/from being all Schengen/EU. But that's just holidays and stopovers. Imagine this is part of your daily life as you go to a restaurant in Belgium, or get a drink after a walk in the Eifel in Germany. Even if you could pay by card (hah, germany and paying by card) the exchange fees would probably add up. Or buying hardware in a German media markt that isn't available in the Netherlands, gotta do math and factor in exchange fees. No thank you, Euros all the way. I'm not economically literate enough to say whether it would be a good idea to have a world currency, but I'd be in favor of working towards that sort of thing if it were sensible (probably you get into issues like some places having a ton of inflation while others are negative and not being able to balance it out with a central bank, but again, I don't truly know the impact of that).
- mbg721 4y ago
  You alluded to this with respect to Germany, but the less cash-based daily life is, the less of a big deal the currency change is. As long as the machine goes beep, it can go beep in drachmas or rand or pesos or whatever.
  - lucb1e 4y ago
    At what fees, though? Within SEPA it's now zero. I can buy computer parts in Germany without considering that downside. Kind of the useful for this 'one market' thing they are trying to have going on. And the mental math every time. I can trust that a coffee is going to be a bit overpriced at worst (but not a real mistake), but is it worth driving 5 minutes to a petrol station that sell it at 493 ISK the litre instead of 529 ISK? Should I buy this shirt for 1500 ISK as souvenir or is that insensible? Hard to tell.
  - troad 4y ago
    I respectfully disagree, it still introduces a lot of unnecessary friction. Being in a Czech supermarket, for example, is confusing, because I don’t instantly know what “79” means, or whether “279” is cheap or expensive. The exchange rate is awkward for mental calculation (22.5 to a dollar). I could convert with my phone, but for a big shop where you’re buying dozens of things, that’s impractical. Euros would reduce the cognitive load of travel and business considerably.

wheels 4y ago

It could. It means that inflation / deflation will be linked to the wider EU economy and not responsive to the particular economic conditions of Croatia. This was a big deal in Greece when inflation would have helped their economy by boosting exports, but was impossible because of being tied to the much stronger economies of Western Europe. There are some advantages to being on the Euro, but macroeonomically, it more benefits large stable countries (which then have an artificially depressed currency) like Germany and France.

tgv 4y ago
And since the coin is now tied to the rest of Europe, it becomes more attractive for members from other EU states to buy property in Croatia, or live there as a pensionado. This can drive the (housing) prices upwards.
- cjbgkagh 4y ago
  The panacea to the worlds economic problems, ever increasing cost of housing.
- nibbleshifter 4y ago
  Property purchase in Croatia was already extremely easy and attractive.
- robbintt 4y ago
  On the other hand, Croatians can freely work anywhere in the Schengen area, right? And vice versa to bring jobs to Croatia?
  - mytailorisrich 4y ago
    That is already the case. The right to freely move and work anywhere (not only in the EU but EEA and Switzerland) is not bound to Schengen.
    - robbintt 4y ago
      I see, so this is not related to work.
  - andrepd 4y ago
    So, they can have their qualified youth (educated at Croation expense) go work and pay taxes in Switzerland or the Netherlands or Germany? I fail to see how that's a positive :)
    - Ekaros 4y ago
      That might not be positive. But now there is even less friction with local companies in Croatia selling services to those countries.
      - csomar 4y ago
        How will these companies be able to sell services to the Western EU if all the skilled workers moved West? Are they as capitalized as their Western counterparts?
        Ekaros 4y ago
        So no company in USA exist outside the best paying locations as absolutely everyone has moved to best paying richer cities. As have the companies as there is no capitalization in poor regions?
cm2187 4y ago
I don't know if I would put France in the stable countries basket. Italy's indebtedness will catch up with them sooner or later. France will likely come shortly after. There are lots of liabilities that come attached to becoming a member of the eurozone. All this debt will have to be inflated away.

europeanguy 4y ago

The meme is that by not having your own currency you have one less emergency measure available to you (devaluing your own currency).

mytailorisrich 4y ago

Immediately it depends on how the exchange rate was fixed, then it will incur rounding effects. Longer term, Croatia will have lost control of its monetary policy but one would expect they reckon they'll gain more from the switch.

jq-r 4y ago
> Longer term, Croatia will have lost control of its monetary policy but one would expect they reckon they'll gain more from the switch. You cannot lose something which you don't have. A bit /s, but don't think its much further from the truth.

martythemaniak 4y ago

Before adopting the Euro, countries spend some amount of time in the ERM (Exchange Rate Mechanisms) where the currency is pegged to the Euro. Thus, the actual switch is just a note swap, the actual advantages and disadvantages are already there. The real issue is they lose the ability to issue debts in their own currency and whether that's good or bad depends hugely on individual counties. It has worked well for some, not for others.

buzzdenver 4y ago
> The real issue is they lose the ability to issue debts in their own currency and whether that's good or bad depends hugely on individual counties. Having your own currency also allows you to set monetary policy and not just follow the European Central Bank. So in time of financial crisis you can print as much money as you want and fiddle with exchange rates to make your country more competitive.
Someone 4y ago
> Thus, the actual switch is just a note swap, the actual advantages and disadvantages are already there. Not quite. When your currency is pegged to the euro, the exchange rate isn’t fixed; you only promise to try and keep it fixed. If that turns out to be impossible (or you don’t want to do it anymore), you can change the exchange rate or decide to stop that pegging. Of course, that you could do that has a price: people will weigh the risk of something like that happening when they invest in your currency. If you join the euro, the exchange rate becomes 100% fixed. Giving up that flexibility removes some uncertainty for investors, and that may be beneficial to you (technically, you could still exit the euro system and reintroduce a national currency, but your national debt and interest payments would still be valued in euros, diminishing the effect you get from getting back your own currency. It also is deeply uncharted territory; I’m not even sure rules for doing it have been made. Markets may judge a move like that similar to how they would judge defaulting on your loans) In some sense, pegging to the euro is the try-out of “what would happen if we joined the euro?”

cjbgkagh 4y ago

It means lower interest rates at the cost of high unemployment, unless you are Germany or some other country with naturally low interest rates. Low interest rates drives up asset prices and assets are owned by the wealthy. Unemployment/underemployment hurts young people the most. Governments can borrow more cheaply and can spend more money on social programs but they also tend to divert it into their own pockets and to the pockets of their backers. When the inevitable crisis hit the countries can’t devalue the debt in response, they instead have to sell national assets.

Beltalowda 4y ago

According to the article: "About 80 percent of bank deposits are denominated in euros and Zagreb’s main trading partners are in the eurozone. Croatians have long valued their most prized assets such as cars and apartments in euros, displaying a lack of confidence in the local currency." So in that sense it's less of a radical change than e.g. Czechia or Sweden, since they primarily use the local currency AFAIK. If you're already half-way using the Euro (kuna is pegged to Euro as well) you might as well join the euro-zone and have some influence.

rsync 4y ago

"... does the switch to Euros carry any disadvantages to average Croatian citizens?" It carries tremendous disadvantages. In fact, I'm quite surprised that at this late date, with a greater understanding of what it means to force your citizens to use the Deutsche Mark, that they have made this decision. With all due respect to Croatia and the lovely people that live there, they cannot compete globally with Germany in any interesting export market. The typical tool that a nation uses to deal with that reality is the relative value of their currency. Consumers of import goods then have a choice to make between German quality and (for instance) Spanish pricing. ... and now that lever will be gone. At this point I think it is fairly well understood what the economic - and social - ramifications of this are and, again, I am actually quite surprised they've made this choice.

toomuchtodo 4y ago
It’s a trade off. You give Germany and France more control, but they are incentivized to backstop you. It seems the countries continuing to join the EU understand this and are at peace with it. Tourism is one of the larger sectors in Croatia’s economy, so frictionless travel between them and other EU members is likely worth the arrangement. They also have a floating LNG terminal, very valuable due to recent events. https://www.countryreports.org/country/Croatia/economy.htm https://www.countryreports.org/country/Croatia/economy.htm
- mytailorisrich 4y ago
  I don't think there is 'Germany and France' anymore these days. There is Germany and their goodwill towards France, if any, [edit:] because all the power and leverage has been with Germany for years now. Recent years have shown that Germany will of course focus on its own interests and policies and ignore France/rest for the EU whenever they deem fit to do so, while France is in a weaker position. At least it used to be that France had military power going for themselves but recent policy changes in Berlin should really and finally set alarm bells ringing in Paris.
  - toomuchtodo 4y ago

johnchristopher 4y ago

[flagged]

vinay427 4y ago
This response seems unfair. Not the GP, but to me their question seems in presumably good faith (I’m not sure that asking if there are any disadvantages is a loaded question) and is followed by a description of their understanding clearly wrapped in a disclaimer to avoid simply “parroting” political memes.
- johnchristopher 4y ago
  Oh, a disclaimer... yeah, that's usually how it works, you play the disclaimer card to candidly disguise your statements as questions. There is no need to repeat the Germany-responsible-greece-lazy idea to ask questions about how adopting the Euro plays out for a given country. I would also point out that Germany is not as responsible as what many people claim considering their little energy problem and the impact it now has on Europe but I am not playing that card.

senko 4y ago

> does the switch to Euros carry any disadvantages to average Croatian citizens? Ignoring temporary inflation due to businesses taking advantage to round things up in Euros, my belief is the switch will be a net positive. Croatia has been already completely tethered to Euro. Kuna was unofficially pegged almost from the start, house and car prices are always quoted in Euros, people's mortgages are calculated in Euros. The "loss" of monetary freedom that comes with not being able to print your own currency is not a loss here because Croatia could in practice never leave the peg, the consequences would be extremely severe. On the other hand, Croatia is a very small country (less than 4m people) and tourism makes up a large portion of the economy. Using Euro removes friction and costs tourists and businesses had having to convert from/to the currency. The removal of the border checks (entering the Schengen, which also happens on Jan 1st) will also help with this. > other countries like Finland regretting the switch from their currency as they don't want to have to suffer sky high inflation and be punished for being financially responsible just to help other countries like Greece or Italy pay their huge debt. Croatia will be a net beneficiary (edited, thx) of EU funds related to the integration processes for at least a couple of years, and is near the rear of the pack in most economic measures.

McDyver 4y ago
> Croatia will be a net benefactor of EU funds Do you mean net beneficiary, instead of benefactor?
- senko 4y ago
  Oops, indeed.
mmarq 4y ago
> Ignoring temporary inflation due to businesses taking advantage to round things up in Euros, my belief is the switch will be a net positive. In Italy we’ve been talking about this a lot. Of course there’s no evidence in the data and until last year prices had barely changed since I attended middle school in the mid 90s.

Strom 4y ago

> Denmark intentionally avoiding the switch to Euro Only in name as a PR move. Take a look at the 10 year EUR/DKK conversion chart. [1] The Danish national bank keeps the currency fixed to euro anyway. -- [1] https://www.xe.com/currencycharts/?from=EUR&to=DKK&view=10Y https://www.xe.com/currencycharts/?from=EUR&to=DKK&view=10Y

boulos 4y ago
Yeah, Denmark is the wrong example. Sweden is the right one: https://www.xe.com/currencycharts/?from=EUR&to=SEK&view=10Y https://www.xe.com/currencycharts/?from=EUR&to=SEK&view=10Y
tokai 4y ago
Nothing to do with a PR move. The voters said no at referendum, regardless of the major parties campaigning for a yes. The infinite peg was just a way to circumvent the result of the public vote.

dns_snek 4y ago

There's a chance that cost of goods and services might significantly increase as businesses exploit unfamiliarity with the new currency. A cup of coffee that costs 15 HRK (2 EUR) today might cost 3 EUR tomorrow. Having said that, it seems like they've foreseen this issue and currently require businesses to display prices in both currencies.

ragebol 4y ago

Being from the Netherlands, I don't think we in majority regret being in the Euro or Schengen. Of course, there's downsides and some people want out, but you'll have those in any country.

InCityDreams 4y ago

>Also, an older Italian gentleman I spoke to once told me that after their switch to Euros, their prices shot up but wages didn't. Curious how true this is and if the same could happen in Croatia. On the euro-conversion day, 1 EUR = 1,936.27 ITLira = 1 Deutschmark (at the time). So, prices went up ie a L1,000 coffee became €1 - it doubled, because a) it was easy and b) people just couldn't be bothered. Businesses had no problem, being bothered, of course - wood from Germany that used to cost DM1,000, now cost €1,000 in Italy when it should have been 1,000/1,936.27 = 516 Euro....but it didn't. I knew a guy that was building a house and it was cheaper to purchase a lot of things from Germany (even with the exchange rates, paperwork etc), and boy did they get burned. Equally, an Italian company they originally called had also doubled their prices, so it would have cost twice as much again to purchase locally. Italy was just the victim of a series of rounding errors, except when it came to wages, as they didn't double. To me, it's just like shopping in the states. A dollar is a dollar, but state, local, county etc taxes sure make it far more interesting than it should be.

I_AM_A_SMURF 4y ago
What you're saying doesn't make sense. If prices had actually doubled there would have been a big spike in inflation in Italy around the time of adoption of the Euro, which there wasn't: https://www.macrotrends.net/countries/ITA/italy/inflation-rate-cpi https://www.macrotrends.net/countries/ITA/italy/inflation-ra... This is just an urban myth.
jaclaz 4y ago
>On the euro-conversion day, 1 EUR = 1,936.27 ITLira = 1 Deutschmark (at the time). No. 1 Euro=1,936.27 IT Lire 1 Euro= 1.95583 Deutsh Mark Around that time, roughly, the change was 990-1,000 Lire = 1 Deutsch Mark.

andrepd 4y ago

It's definitely not pointless. Consider this: the Eurozone is a monetary union without a fiscal or political union. Its monetary policy is effectively controlled by the biggest economies, particularly Germany. However, countries have drastically different monetary goals, as can be sharply seen in times of crisis, such as the sovereign debt crisis in the 2010s. It's fundamentally impossible to satisfy the goals of Germany and Greece, for example, with a unified currency but no fiscal union (and of course, with no democratic governance).

lucb1e 4y ago

> other countries like Finland and Netherlands regretting the switch Oh man I absolutely do not. This makes life so much easier as a Dutch person. It felt a bit weird and was tricky to deal with and mentally convert Iceland's currency to something that makes sense to me while on holiday last year, or having prices for books and food in a stopover airport to Finland in another random currency despite to/from being all Schengen/EU. But that's just holidays and stopovers. Imagine this is part of your daily life as you go to a restaurant in Belgium, or get a drink after a walk in the Eifel in Germany. Even if you could pay by card (hah, germany and paying by card) the exchange fees would probably add up. Or buying hardware in a German media markt that isn't available in the Netherlands, gotta do math and factor in exchange fees. No thank you, Euros all the way. I'm not economically literate enough to say whether it would be a good idea to have a world currency, but I'd be in favor of working towards that sort of thing if it were sensible (probably you get into issues like some places having a ton of inflation while others are negative and not being able to balance it out with a central bank, but again, I don't truly know the impact of that).

mbg721 4y ago
You alluded to this with respect to Germany, but the less cash-based daily life is, the less of a big deal the currency change is. As long as the machine goes beep, it can go beep in drachmas or rand or pesos or whatever.
- lucb1e 4y ago
  At what fees, though? Within SEPA it's now zero. I can buy computer parts in Germany without considering that downside. Kind of the useful for this 'one market' thing they are trying to have going on. And the mental math every time. I can trust that a coffee is going to be a bit overpriced at worst (but not a real mistake), but is it worth driving 5 minutes to a petrol station that sell it at 493 ISK the litre instead of 529 ISK? Should I buy this shirt for 1500 ISK as souvenir or is that insensible? Hard to tell.
- troad 4y ago
  I respectfully disagree, it still introduces a lot of unnecessary friction. Being in a Czech supermarket, for example, is confusing, because I don’t instantly know what “79” means, or whether “279” is cheap or expensive. The exchange rate is awkward for mental calculation (22.5 to a dollar). I could convert with my phone, but for a big shop where you’re buying dozens of things, that’s impractical. Euros would reduce the cognitive load of travel and business considerably.