Are you planning to travel to Europe?
Mismanaged money can get you only so far.
Don’t let certain money crises tamper with your work or vacation. Here is all that you need to know about the currency and money management.
The history of Euro
The Euro was introduced as an electronic currency by the European Union into the financial community in the year 1999, however, the circulation of the currency notes and coins started in 2002.
Initially adopted by the 11 member states, currently 19 out of 28 European Union members have adopted the euro as their national currency. This meant that the home currencies of the euro-adopting countries were not allowed to fluctuate against each other or the Euro.
The currency was realized in order to achieve a more stable European economy.
The Symbol of Euro is EUR and is denoted by ‘€’.
The denominations of Euro banknotes range from €5 to €500. Euro banknotes, throughout the Euro-zone, are identical, unlike the euro coins. One side of the Euro coins indicates the country of issue. The total number of denominations available are seven: €5, €10, €20, €50, €100, €200 and €500. Each note has a peculiar size and color.
Benefits of the currency
The Euro has effectively obliterated the need to exchange currencies, therefore it saves the states the extra charges, that is, the exchange rates.
Notably, Euro has lead to economic growth across the European countries and purveyed increased homogenization within the financial markets. The reserve currency has also resulted in strengthening the European presence in the Global Economy. It has opened doors to more businesses and markets, encouraged cross-border trade, brought new trade opportunities, thereby advancing trade relations and ensuring economic stability. As a result, doing business in the Euro-zone has become safe and cost-effective.
The efficient management of the currency and the Euro-zone monetary policies has made the currency more resilient to economic turbulence.
A brief about the European Union
It was evident that in order to burgeon the European economic and strengthen internal markets, close economic relations were required. These relations could further lead to increased employment rate and a better standard of living for the Europeans.
Formed officially in 1993, it is an economic and political unification of 28 member states that are located mainly in Europe. The number is soon expected to come down to 27 due to Britain’s exit from the Union.
The European Union was formed via the Maastricht Treaty, comprising of three essential components:
● European Communities
● Cohesive domestic affairs and justice standards
● Security and foreign policy
● Common monetary policy
● Economic standards and Social issues
Along with the primary goal to establish peace and a coalesced monetary and economic system, it also promotes technological and scientific developments, protection of environment, social progress. One of its major functions is to combat discrimination within its member states.
Eurozone refers to the region thus created by certain countries, where Euro serves as the common national currency and the sole legal tender. Euro-system is the monetary authority of the Eurozone and the European Central Bank is responsible for issuing the currency. Primarily tasked with keeping inflation under control, the European Central Bank is also responsible for designing and implementing the monetary policies.
Did you know that amongst the remaining countries: Bulgaria, Croatia,Czech Republic, Hungary, Poland, Romania, and Sweden (apart from Denmark and the United Kingdom (before Brexit)), are obliged to join the Eurozone once they meet its criteria to do so.
Eurozone also has provisions to grant emergency loans to the member states. The provisions were established after the financial crisis of 2007-2008.
The list of countries that have adopted the Euro as the national currency is as follows:
STATE YEAR OF ADOPTION OF EURO PRE-EURO CURRENCY EXCEPTIONS
1. Austria 1999-01-01 Schilling
2. Belgium 1999-01-01 Franc
3. Cyprus 2008-01-01 Pound Northern Cyprus
4. Estonia 2011-01-01 Kroon
5. Finland 1999-01-01 Markka
6. France 1999-01-01 Franc New Caledonia, French Polynesia, Wallis and Futuna
7. Germany 1999-01-01 Mark
8. Greece 2001-01-01 Drachma
9. Ireland 1999-01-01 Pound
10. Italy 1999-01-01 Lira Campione d’italia
11. Latvia 2014-01-01 Lats
12. Lithuania 2015-01-01 Litas
13. Luxembourg 1999-01-01 Franc
14. Malta 2008-01-01 Lira
15. Netherlands 1999-01-01 Guilder Aruba, Curaçao, Sint Maarten, Caribbean Netherlands
16. Portugal 1999-01-01 Escudo
17. Slovakia 2009-01-01 Koruna
18. Slovenia 2007-01-01 Tolar
19. Spain 1999-01-01 Peseta
Outside EU usage
Currently, one British territory and three French territories, outside the European Union, use the Euro as their currency:
1. Akrotiri and Dhekelia
2. Collectivity of Saint Martin
3. Territorial Collectivity Of Saint Barthélemy
4. Overseas Collectivity of Saint-Pierre and Miquelon
5. French Southern and Antarctic Lands
European countries that do not use Euro
Country Currency used:
1. Bulgaria Lev
2. Croatia Kuna
3. Czech Republic Koruna
4. Denmark Krone
5. Hungary Forint
6. Poland Zloty
7. Romania Leu
8. Sweden Krona
9. United Kingdom Pound sterling
Non-EU member states usage with Formal Agreement
There are four states that have adopted Euro after having signed a formal agreement with the European Union, however, they issue their own coins: Andorra, Monaco, San Marino, Vatican City. Unlike the EU member states that have adopted the Euro as a common national currency, these states do not have a seat in the European Central Bank.
Unilateral usage of Euro
Two states, Kosovo and Montenegro, adopted the Euro as their currency without any formal agreement. Having adopted the Euro unilaterally, the two states are not a part of the Eurozone.
Given below are the recorded values of Euro against INR in the year 2019:
MONTH EURO (EUR) INDIAN RUPEES (INR)
January 1 80.11-81.70
February 1 81.52-81.01
March 1 80.54-77.92
April 1 77.53-78.01
May 1 77.99-77.74
June 1 77.73-78.35
July 1 78.35-76.69
Factors affecting the Euro
Some of the significant factors that affect the currency include:
● Gross domestic product or economic growth:
A factor that has a significant impact on the euro is the all-inclusive economic output of the Eurozone. The economic output is the fiscal measure of the market value of the total goods and services produced. The growth in gdp is directly proportional to the strength of the euro in the global economy.
● Monetary Policy:
Each currency gets affected by the monetary policies implemented by the central bank that controls it, in this case the European Central Bank. To anticipate the position of the euro due to the aftermath of the policies, the press releases by the president of the ECB are extremely valuable.
The economic union of the European countries was formed to keep a check on inflation. Inflation is inversely proportional to currency strength. Higher inflation means depreciation in currency value.
● Balance of payments:
This simply means the trade balance of the Eurozone. The interaction of the Eurozone with non-EU members in terms of payments, trade exchanges, income determines the value of the euro.
Mind your money
If you are confused about estimating your budget for the trip then remember, a trip to Europe can be managed according to any rational budget. Food, travel, stay and leisure activities can all be adjusted according to your budget.
Money is a prime concern. In Europe, while traveling you might need sufficient cash in hand all the time. It is highly convenient to carry small bills. However, the readily available ATMs can help you with that. There are certain web portals, sights, and cities that deal mostly in cash. Therefore, forex cards are highly effective for travel in Europe. They are the cheapest way of carrying and paying in any foreign currency, including Euro. Their versatility makes Forex cards more efficient and easy to use than credit and debit cards. As a safety measure, you can also set a withdrawal limit, in case the card gets stolen.
No matter how much cash you carry, Forex cards always come in handy. In case you are planning to travel to countries that haven’t adopted the Euro, prepaid travel card is your best option. Reduced or no fees for foreign transactions make Forex cards pocket-friendly.
As Anthony Bourdain said about travel:
“…IT LEAVES MARKS ON YOUR MEMORY, ON YOUR CONSCIOUSNESS, ON YOUR HEART, AND ON YOUR BODY. YOU TAKE SOMETHING WITH YOU… HOPEFULLY, YOU LEAVE SOMETHING GOOD BEHIND.”
But make sure it’s not your money. Make the most of it, outsmart all the momentary contingencies. So take with you a good spirit and a multi-currency Forex Card.