Americans still don’t like dollar coins

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.

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Photo courtesy Flickr user cometstarmoon. Hat tip to Honza Kerver for the NPR story link.

UK towns opening up to euro

A lot of travelers stop by the United Kingdom as part of a European trip, but they have the problem of what to do with their euros when they are in a land that uses pounds.

This is becoming less of a problem, according to a report by the BBC. More and more businesses are accepting euros as well as pounds in an effort to attract tourists. Shops, restaurants, even hotels are accepting euros. I noticed this trend several years ago in London, but it has spread across the country now, and is gaining ground in places like Northern Ireland towns that want to draw in shoppers from the Republic of Ireland, which uses euros.

There are some limitations, however. Most places only accept banknotes and give change in pounds. Also, the exchange rate may not be all that good, although the little town of Dunster is offering a one-to-one rate, a great deal considering that in a bank a euro will only buy you 85 pence, minus whatever fee they slap on you.

But before you whip out your euros in the Green and Pleasant Land or Emerald Isle, be careful. Some places defiantly stick to the pound. I’ve even seen signs telling in no uncertain terms that euros are not welcome. For the UK, integration with the Eurozone is still a long way off.

Europeans invade New York for holiday shopping

It’s been a while since anyone has called New York the “bargain place”. This year, New York might as well use it as a city motto. With strong currency working to their advantage, Europeans have been coming to New York in droves to do all their holidays shopping.

Today’s NY Times had an comparison table of London and New York prices. Here is an example:

  • New York prices – 8 Gigabytes iPod Touch: $299, Levis 501 jeans: $58, Starbucks Grande Latte: $3.75
  • London prices – 8 Gigabytes iPod Touch: $398, Levis 501 jeans: $120, Starbucks Grande Latte: $4.80

How many iPods do you have to buy to make the trip worth it though? Air tickets are really expensive before the holidays and New York hotels–trying to capitalize on the strong Euro/Pound are charging more than $400/night for a hotel that used to cost about $100 just a few years ago…

I have heard from Londoners that having a fun weekend in London will cost you more than flying someplace for the weekend. London is so expensive now that the only way to save money is to leave it. Quite a concept!

Dollar Crumples But Tourists Still Come to Europe

The latest plunge of the dollar (more than 2 dollars to the British pound now and 1.35 to the Euro) caused many Americans in Europe to scale back their vacations, July 19 NY Times article reports. Apparently, these things are all relative. It has not significantly influenced the number of Americans traveling to Europe. Just as people are getting used to the nearly $4 gallons of gas, they are getting used to $5 cans of soda and $300 mediocre hotel rooms in Europe.

What it has changed, however, is the number of Europeans–with strong currency to their advantage–traveling to the US. It was cheap for Europeans to buy clothes and electronics in the US before (because of the low sales tax) but now with the exchange rate, it is super-cheap. Last time I was flying from London to NYC, they actually handed out magazines advertising all the real estate bargains in the world. One of the bargains was Manhattan, NY. I had to laugh.