According to an NPR story this week, the Federal Reserve is sitting on a billion dollars worth of the $1 Sacagawean and Presidential coins, and the program to replace dollar bills with the metal coins has largely been deemed a failure. The government spends millions annually to mint new coins in order to introduce all the US presidents, resulting in millions languishing in vaults a la “Scrooge McDuck” said Planet Money’s David Kestenbaum. Despite the fact that they are legal tender and the government’s many efforts to promote their use, Americans still distrust the dollar coin.
Why the reason for the distrust? Americans claim they are difficult to spend, not recognized by many merchants, or just weigh down pockets too much. Perhaps we should ask our foreign neighbors how they have integrated them into daily life. America is one of the few countries in the developed world to use a $1 banknote and the only one of the top five traded currencies (including the Euro, British Pound, Japanese Yen, and Australian dollars) to use a bill in such a small denomination. Canada replaced the dollar bill with the “loonie” coin in 1987 and the British pound note has been out of circulation since 1983. Is taking away the $1 bill the only way to get Americans to use the coin? We reported earlier this year on a possible way to earn frequent flyer miles by purchasing dollar coins, a legal (but not encouraged by the US Mint) practice that may actually contribute to this back log of currency. Maybe go out and spend the coins instead and hope the trend catches on.
Photo courtesy Flickr user cometstarmoon. Hat tip to Honza Kerver for the NPR story link.
American travelers often complain about the current money situation in Europe. With the Dollar/Euro exchange rate sitting around $1.40/1, along with inconvenient credit card PIN requirements, making a purchase in many European countries is downright inconvenient. But there was a time it was far more complicated – namely any date before 2002, when Europe’s common currency, the Euro, was first introduced.
My first taste of European travel came in the waning years of Deutsche Marks, Guilders and Pesetas. Every time you moved to a new country, you had to exchange your money for a new currency. For a young backpacker like me experiencing several countries for the first time, it was a confusing and expensive proposition, particularly when you were in transit among several of them at once. Traveling from The Netherlands via Belgium to France? Best not try to buy something in Brussels: that would require you to exchange money. And forget about keeping the notes, coins and exchange rates straight – each brightly colored pink note and strangely bearded head of state was a new lesson in geography, history and politics and quickly calculated math.
Europe has grown up since then. Today, I can use the same money for a pizza in Rome as I do to buy a sweater in Dublin. But despite the simplicity of the Euro, I still find myself pining for those days before the single currency began its monetary dominance. Maybe it’s no more than the naivete of youth – a simpler time in my life when those first exotic breaths of foreign culture and the feel of strange currencies in my palm suggested all the possibilities of travel and adventure.
Is travel easier in Europe now? Yes, absolutely. But with that ease of use, a distinct piece of national identity also disappeared along with it. Our globalized world marches on.
[Photo by Flickr user viZZZual.com]
The Bank of China has begun offering its customers in New York City and Los Angeles services in yuan, Bloomberg reports. Services include deposit, exchange, remittance, and trade finance. Business customers may access these services in New York City and Los Angeles, while at the moment individual customers can only access these services at the New York City branch.
What does this mean for travelers? Not much, yet. If you’re one of the many English teachers in China you can send money home more easily, but that’s about it.
It’s the long-term view that’s interesting. China is obviously trying to expand the range of the yuan (also called the renminbi) beyond its borders. In fact, Chinese Premier Wen Jiabao said as much last year when he expressed worry over how much China’s international assets are dominated by the dollar. This move allows international trading in yuan, which is sure to attract more investment and, if it’s successful, bolster the currency’s strength. It’s already at an all-time high against the dollar. The New York branch’s general manager says the move will eventually lead to the yuan being fully exchangeable with the dollar.
This will encourage further investment in China and could lead to more foreign businesses opening up shop there. It would also make it easier for international travel businesses to have offices in China. A yuan that’s strong against the dollar, however, will make trips to China more expensive for Americans.
Tourism is one of the fastest growing sectors in the Chinese economy. More and more Chinese are traveling abroad, and with greater access and use of their currency, those numbers will only increase. The World Trade Organization says if current trends continue, China will have the largest share of the world’s tourism industry by 2020, with 8.6 percent of global revenue.
Could yuan become another international currency like the dollar and the euro? Could we see money changers accepting them in more destinations? Only time will tell.
[Photo courtesy user Polylepsis via Wikimedia Commons]
If you’re going abroad, getting local currency from an ATM attached to a bank is cost effective and easy, but the problem is that you only get large bills, and many times the attached bank is not open to exchange for smaller bills.
When traveling, especially in South America and Africa, I have found it helpful to bring American one dollar bills for tips. There’s nothing worse than trying to ask someone who you want to tip to make change.
Dollar bills are almost always greatly appreciated, and are typically very tough to find once you’re abroad.
Counterpoint: Don’t pay in dollars – International travel tip