ThinkTWENTY20

By Eric E. Cohen

With the new year 2022, we will be noting two anniversaries related to the standardization of money. Do you have a thought as to which has had a greater impact so far, and which will lead to the future?

On January 3, 2009, some 13 years ago, the bitcoin network came into existence, with the first 50 Bitcoin as part of the “genesis block.” Initially of infinitesimal market worth, by 2011, BTC hit $1 US. As I write this, it is at around $47,000 US. Other than intellectual and extreme professional interest, however, Bitcoin has not affected me personally; I have not moved a “sat” (although I have paid gas fees with Ethereum). I know many people who have become rich or found financial stability due to Bitcoin, Ethereum and their friends.

The focus in this blog entry, however, is not on cryptocurrency. It is on more traditional currency and the benefits of standardization. Only seven years before Bitcoin’s introduction, on January 1, 2002,* the world experienced a major change in its currency and coinage that had a greater practical and immediate impact on me; on that date, 12 European Unio

n (EU) countries introduced the Euro banknotes and coins. Now, the Euro is the currency of 19
countries with more 
han 340 million people – plus folks like me who travel abroad. In recognition, the European Union is celebrating #EUROat20. 

When I first started with PricewaterhouseCoopers, I spent more time at PwC’s offices in Brussels than I did in the offices in my (then) hometown of Rochester, NY, USA. My first of my many European trips was in September 2000, and – other than the US and Canadian dollar exchange – I had no prior experience with foreign exchange. In one very lovely and memorable week, I visited Belgium, France, Switzerland and England. There was so much to take in, and my three years of high-school French did not serve me well.

At the time, three of those countries had a currency called the Franc, although they were wildly different in value. For perspective, according to the European Central Bank, one Euro at the time was pegged at €1 = 40.3399 BEF = 6.55957 FRF = 1.2 CHF- a factor of six or so from one currency to the next. I was sitting in taxis and standing at kiosks in a highly cash-oriented society before smart phones and translation devices, with a pocketful of strange coins all called francs from three countries and a language barrier (ask me about the restaurant with the sign “Les moules sont arrivées” sometime), sometimes transiting between countries and not knowing whose Francs were being demanded or which coins to give. Were they charging me $100 US or $15 US or $2.5 US? At least PwC was reimbursing me. All I know is that, by the time I converted my Belgian, French and Swiss currency into GBP (UK pounds) and then into USD (US dollars) to return home, I had a fraction of what I started off with in dollars and knew I hadn’t spent so much. Conversion costs get you every time.

With a few more trips under my belt and a planned strategy, the world changed just four months later. I spent a week in Belgium before the first XBRL International conference in London, in February 2001. Instead of Belgian francs, the world had suddenly changed. I was now buying Euros, and they would be good not just in Belgium, but also (initially) Austria, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. Since then, adopters include Bulgaria (2020), Croatia (2020), Cyprus (2008), Estonia (2011), Latvia (2014), Lithuania (2015), Malta (2008) and Slovakia (2009).
This standardization has been largely to my benefit in convenience, as I visited a dozen of these countries over the years with little concern about having cash on hand. I had established a routine of keeping enough currency for each country I visited to take a train or taxi from the airport to downtown without worrying about finding an ATM at the airport. I am in a bit of inconvenience over having kept Dutch banknotes and Deutsche Mark from before the Euro era, although the European Central Bank indicates I have another 10 years for exchanging Dutch guilder banknotes for euros and no time limit on either banknotes or coins for Germany at their respective national central bank. French Francs and Italian Lira, however, are just collectibles – if that.

The European Commission notes that a few more countries may yet adopt the Euro, including Czechia, Hungary, Poland, Romania and Sweden. I will ty to do a better job in monitoring my forint, zioty and krona. But I have found both traditional currencies and even “electronic currencies” may not have staying power either. I believe the value of my Hong Kong Octopus card may have expired, as one example. For another example, England loves to make people exchange their coins and banknotes. If you have £10 and £20 banknotes from England before February 2020, they become obsolete after September 20, 2022! Yes, if you bulked up on GBP before the pandemic, your currency won’t be accepted in stores in just 10 months.

In Canada, there have been no plans to demonetize bank notes, although they may no longer be legal tender. A quick trip to the Bank of Canada may be required to redeem older bills. And don’t forget, if you have any $25 bills around, they may have numismatic value that exceeds face value. In the U.S., all currency remains legal tender, whether a 2-cent coin from 1865 or a 2 dollar bill (a current denomination that people don’t believe is real).
So here is to the #EUROat20. My appreciation for the convenience; my admiration for the work each country puts into the design. They even inspired architecture – a series of bicycle and pedestrian bridges in the Netherlands (known as the “Spijkenisser Eurobruggen” or Spijkenisse (the city where they are found) Euro Banknote Bridges).

* Although the EU website clearly says “on 1 January 2002, 12 EU countries introduced euro banknotes and coins,” and it fits correctly in my personal timeline, I nonetheless have euro coins with 1999, 2000 and 2001 dates on them. Clearly some countries chose to mint them in advance of circulating them.