Bryan Caplan  


The Golden Rules of Interpreta... The Conservative, the Progress...

Here's my last gasp of Europhilia: The Euro has much better denominations than the dollar. Instead of $1 bills, they've got 1€ and 2€ coins, worth about $1.50 and $3.00 respectively. Tipping's a lot easier; so are vending machines. The bills start off at 5€, which means you'll probably never have trouble closing your wallet.

Europe's a lot more expensive than the last time I was there, but spending money is noticeably more convenient.

P.S. Per my last post, having one good thing to say about the Euro doesn't mean that I favor it overall, that there aren't better options, etc.

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COMMENTS (11 to date)
Maniakes writes:

I think your preference for euro demoniations is a product of euros being better suited for your cash-handling habits, not an inherent superiority of euro denominations. Dollar denominations work a lot better with my own cash-handling preferences.

I hate carrying coins, because the only practical way to do so is to clutter my pockets (which are already burdened with wallet, keys, and phone). Any coins I accumulate over the course of a day, I dump out onto the top of my dresser when I get home.

Given coins of value >= $1, I'd have to change my habits and start carrying coins, because that's too much money to reasonably abandon to the change pile.

I've never found carrying bills around to be a hassle, and I round tips up to the nearest dollar. I hardly ever use vending machines.

brian writes:

Living in the UK, I prefer the £1 and £2 coins myself (worth $2 and $4 respectively) to the US system. Like Bryan, I find the coins much more convenient to use. When I first moved here, I hated the system, but I quickly got used to it and found that I actually preferred it.

On a slightly different topic, I can't believe that you have to put a disclaimer on your post whenever you dare say anything good about Europe, like it's heresy. It seems rather ridiculous to me.

Marko writes:

And don't forget there's also a 500 euro bill.

Robinson writes:

I was just in Germany, and I have to say I felt exactly the opposite. I can't stand carrying around coins, and I can usually survive perfectly well in America almost never having to use them (I just shove them in my pocket and keep them in a jar later like half of the United States does).

This might just be a habit ingrained by most American coins (pennies, nickels and dimes) being so useless, though. I'm sure if I lived in Europe, I'd start wearing pants with more suitable pockets etc and adjust.

Ethnic Austrian writes:

The lack of a 1 or 2 euro bill is simply about cost. Small bills don't last very long. They cost a couple of cents per year to replace.

The majority of people seem to prefer bills to coins. We used to have both, 20 Austrian Schilling (1-2$) notes as well as coins, but everybody prefered bills.

The lack of an equivalent euro bill was a major complaint in Austria and even more so in Italy, where the concept of a "coin" had almost been forgotten. ;-)

200 and 500 euro bills were introduced mainly because of Germans, Austrians and the Dutch being used to such denominations and many eastern and southeastern europeans who traditionally prefered their mattresses to banking. There was the fear that they would have converted their german marks to dollars, instead of euros. Larger denominations are more practical for mattress banking.

Nick writes:

Bryan, I agree with Maniakes--Euros wear holes in your pockets. Every time I go to the continent I come back with far too much coinage (which you know you can't easily exchange). I do admit it's worse here in the UK where the coins are larger and weigh more.

That being said there are a lot of reasons for liking the Euro, including the ECB. The ECB, being much newer than the Fed, has more sensible operational procedures for controlling monetary policy (i.e., very sensible weekly tenders aligned with maintenance periods and ECB meetings, infrequent fine-tuning ops, unlike the Fed's almost daily open-mkt ops, and a wider set of counterparties and collateral). Partly due to its novelty, the Euro's operations attempted to adopt best practices wherever possible, something the Fed is only now trying to mimic. The ECB hasn't had to invent some alphabet soup of programs as an overlay to a complicated morass of outdated operational procedures. But, then again, change is always difficult....

The other upside is a steadier hand at the till. Unlike like the rock-star Greenspan, pumping up the US on a steroidal fueled shake of low rates and lax supervision, or Bernanke, who had to invent policy on the fly, Trichet like Duisenberg before him, understands that good central supposed to be boring.

Mark Wonsil writes:

In Japan, bills don't show up until 1000 Yen (roughly $10.00) For coins there's 1, 10, 50, 100, and 500 Yen which makes vending extremely easy. The 5 and 50 Yen coins have a hole in them and I'm not sure why the 500 Yen coin broke the pattern.

What do you mean the 1€ and 2€ coins are good for tipping? There is practically no tipping in Europe. Additionally I spent two weeks in Europe and never used a vending machine or felt any reason to do so whatsoever.

I'd also have to say Americans are amazingly slow in moving beyond physical money. As a Canadian I use my debit card for my purchases probably 95% of the time.

caveat bettor writes:

As a one who traveled to London and Frankfurt monthly for 4 years, I have no disagreement, but would mention that the wear and tear on trouser pockets is a tax.

I mean, where do you put your coins (not to mention other stuff) when both your front pockets are shredded?

Matthew C. writes:

I'd also have to say Americans are amazingly slow in moving beyond physical money. As a Canadian I use my debit card for my purchases probably 95% of the time.

Plenty of us 'Murricans who do the same. . .

Dr. T writes:

Most Americans are stubborn and stupid when it comes to currency. (Yes, I did read Robin Hanson's "Golden Rules of Interpretation," and I will stand by the preceding statement.)

Pennies have had no practical value for decades, but we cannot seem to get rid of them. Multiple attempts to reintroduce a one dollar coin failed because people prefer crumpled, filthy bills.

I hate currency and would prefer some kind of electronic currency device (card, memory stick, USB flash memory, etc.). But, if we must use currency, then we should simplify to three coins (nickel, quarter, and dollar) and four bills (five, twenty, one hundred, and one thousand dollars). We can take advantage of the need for change (pun not intended) and design the coins so that larger diameter reflects greater value and design the bills so that larger size reflects greater value. (This is in reference to the lawsuit about blind persons not receiving adequate accommodation in regard to bills.)

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