You must log in or register to comment.
Good on them, I never understood why there are still so many countries holding onto their national currencies. It makes trade and tourism so unnecessary complicated.
Some arguments I heard when we switched 15y ago:
- without euro you can print money to devaluate your own currency to devaluate your debt at the expense of people’s savings and rampant inflation. Frankly I’m happy politicians lost the ability to do that.
- sellers may take the opportunity to bump up all their prices, which was actually true in my country. Of course the blame is on the sellers, not the currency.
- cultural and historic identity associated with the currency
Oh yeah, in the Netherlands they switches from the gulden to euro, which was about 2.1 gulden, and a whole bunch of stores thought it okay to just change the gulden symbol for a euro symbol, and call it a day. Prices went up like crazy, but largely due to stores just trying to rob people blind hoping nobody would notice
The second point is kind of true. I remember when Germany switched from the DM to the EUR, prices almost doubled overnight because they just swapped the currency symbol without paying attention to the exchange rate.
This was true for some goods but not most. Grocery stores would list both currencies for a year and people from Poland are still crossing the border to buy groceries so it can‘t be that expensive.
The first argument had been even voiced by German Fiscal chauvinists opposed to the Euro. It really is just the analogy to loose the access to pain killers. Yes that can be a downside but even greater is the downside of muting the pain indteax of treating the issue causing the pain. Devaluation is commonly leading to a lack of structural refogms, because it makes the symptoms go away, fora while.
I get it tbh. There are both benefits and risks with having your own currency. Having your own currency being devalued makes your population poorer, but can also reduce the unemployment because you can export more.
So it’s both good and bad. I think it all comes down to if you want to be part of a bigger Europe or not.
I’m a big proponent of the Euro, so I’m a bit annoyed that my country refuses to adopt it. The problem is that whenever our currency is weak people want to join the Euro, but then we’d get a “raw deal”, but then our currency gets strong again and then people don’t see the benefit of joining. It’s frustrating.
Some are, but others don’t currently meet the requirements for adoption
Prices are also always rounded up after conversion, when 500 HUF becomes 1.41, shops likely make it 1.50. Also I’m getting 4% on my savings in czk, whereas with a euro account you’d be lucky to get close to 2%.
Also I’m getting 4% on my savings in czk, whereas with a euro account you’d be lucky to get close to 2%.
That’s pretty much just the inflation of both currencies. The average inflation over the last ten years for EUR is ~2.9% and for HUF is ~5.7%. You loose value with both accounts, but the Hungarian one is loosing value faster.
Since the exchange rate also varies a bit its hard to say which account would make you more money in the long run, but the difference is minimal at best.
Why would banks give you more interest on HUF than on EUR once there is no HUF anymore? There is no rational argument for that. While EUR is not national currency it is not the same as when it is.
Why would banks give you more interest on HUF than on EUR once there is no HUF anymore?
That’s my point. Now they do and changing to euro would be a loss in this case
I think you are not understanding my point. Currently these banks are offering higher interests on accounts in the national currency than accounts in a foreign currency. Why should that change with the introduction of the Euro?
PS: Banks are also not handing out anything for free, what they hand out, they charge elsewhere and then some.
Why wouldn’t they change?
Now:
Czech bank gives 4% on CZK
Dutch bank gives 1.5% on EUR
After:
Czechia introduces EUR: they will also switch to 1.5%
It really has nothing to do with banks, rather with Central Banks. Granted, lower reference interest rates by the ECB could lower interests you get on your account but it also means that credit rates go down. If you think interest on a regular bank account is a viable long term investment strategy reliably above inflation rate, your mistaken.
The Hungarian central bank has currently very high interest rates. High rates are also fueling inflation, as there is no such thing as a free lunch. While currently Hungary has lower inflation, probably also thanks to the optimism based on the recent regime change, it has a long track record of higher inflation.
You don’t agree? Have a look at the development of the Hungarian interest rates and its inflation in the previous 10 years. It has not always been the case that Hungary had much higher interest rates either.
Nvm
