| Date: | April 28, 2006 / year-entry #150 |
| Tags: | non-computer |
| Orig Link: | https://blogs.msdn.microsoft.com/oldnewthing/20060428-15/?p=31363 |
| Comments: | 35 |
| Summary: | Like the United States, Sweden is in the process of upgrading their paper currency to incorporate new security measures. Unlike the United States, Sweden is declaring the old bills no longer valid. The original plan was that the old 20-kronor, 100-kronor and 500-kronor notes would expire today, but due to the enormous number of outstanding... |
Like the United States, Sweden is in the process of upgrading their paper currency to incorporate new security measures. Unlike the United States, Sweden is declaring the old bills no longer valid. The original plan was that the old 20-kronor, 100-kronor and 500-kronor notes would expire today, but due to the enormous number of outstanding old bills (1.5 billion kronor, by Riksbanken's estimation), the grace period for turning in your old notes has been extended to the end of the year. The expiration date for the silver 50-öre coin has not changed, however. Today is still the last day those coins are legal tender. I think I have a 50-öre coin or two in my "leftover Swedish money" collection. Sure, it was a souvenir, but now it's officially one. (50 öre is approximately US$0.07.) When the United States updates its currency, it does not declare the old currency invalid. Partly this is an acknowledgement of the sensibilities of its citizens, especially the people who don't trust banks and keep piles of cash hidden in their house. But it's also an acknowledgement that most United States paper money isn't even in the United States. The United States dollar has historically been the stable currency of choice (though the Euro appears to be poised to overtake the dollar soon), and you can probably still find mattresses stuffed with $100 bills in some countries. |
Comments (35)
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<i>though the Euro appears to be poised to overtake the dollar soon<i>
Hey, you forgot the link for that one.
So basically you are saying that Sweden have stolen ~$0.07 from you. And probably much more from other people. Not surprising for a socialist country.
Declaring currency obsolete, grace periods or not, is stealing.
It similar but much worse than store rebates that are given counting on the fact that some people will not be able to use them. At least you can refuse to buy a product with such rebates. But you usually cannot refuse to accept national currency.
I never really understood the point of introducing new anti-counterfeit measures on US currency. Afterall, wouldn’t you just make copies of the old kind that didn’t have all the fancy technology?
Also, changing the styles every few years means that your average cashier will never be able to properly recognize every style that has ever been made, and certainly won’t be able to remember the anti-counterfeit measures that each particular series has. Do you look for a watermark? Color-changing ink? Different colors?
As a fiat currency, US currency is only as valuable as people trust that it is. This means that if you go changing it too often, people won’t be able to immediately recognize it as official US legal tender, and won’t trust it. If they don’t trust it, it loses value. This is also why they can’t just recall all of the old bills out there — that would effectively devalue the currency.
AugieM: search for <euro reserves> and you’ll find articles about countries shifting from dollars to euros as their reserve currency, such as Sweden: http://www.businessworld.ie/livenews.htm?a=1402857 whose Euro reserves are 50% and US Dollar reserves are 20%. Drug dealers have also started switching to the euro: http://slate.msn.com/id/2111504/
Euro seems to be the preferred cash currency due to its larger denominations but what are those assets laundered into?
Oh and the US does not change its currency every few years so recognizing it is not usually an issue.
This Euro getting much stronger than the Dollar thingy is killing me (and all European shareware authors, no doubt): since the Dollar is still the ‘Universal’ currency and most of our customers are from the US, we have to keep selling our ‘wares’ in US Dollars.
The problem is that when the Euro was first introduced, I got 1.20 Euros for each US Dollar. Now I get something like 0.75 Euros. This means that I’m now making nearly 40% less on each sale than I did 3 years ago. That’s a lot of money. :-(
Jerry Pisk: The Bureau of Engraving and Printing (http://www.moneyfactory.gov/section.cfm/4)redesigns currency every 7-10 years. The $10, $20, and $50 bills are all currently on their third design.
Just over 10 years ago there was a single design for each of the 7 different denominations of US paper money. Now there are 2 $5s, 3 $10s, 3 $20s, 3 $50s, and 2 $100s (plus the $1 and $2) for a total of 15 possible designs that must be recognized as legal tender.
In other words, the number of designs has more than doubled in the past 10 years.
Marvin: Even obsoleted Swedish money can be converted to modern currency by sending it in to the Riksbank (the swedish central bank) – it’s just not legal tender with merchants.
Rightfully so – money that’s too easy to counterfeit just devalues the currency. I much prefer having old currency phase out to having a currency that can be counterfeited with a cheap inkjet.
In the US, you often see cashiers run a pen over a new-looking dollar bill, glance at the mark for a tenth of a second, then carry on with their job. I still wonder how this magic pen tells them whether the bill is real or counterfeit.
And it’s not like cashiers have dozens of designs to memorize. The most common bills are VERY common, $50 and $100 are seen comparatively rarely. Plus, the classic $5 $10 and $20 are practically non-existent now (I haven’t seen one in years).
In the UK we have upgraded our £5, £10 and £20 notes over the past 10 years or so. The old notes cannot be used in shops but (I think) can be exchanged in banks for new ones.
I don’t think we have upgraded our £50 notes, but then very few people use them anyway. I’ve only ever held one once in my life.
Mike Dunn:
If the pen creates a certain color, the bill is counterfeit. Here, you buy your own: http://www.shoplet.com/office/db/g2204.html
Also, I still see plenty of the classic $5, $10 and $20 bills.
Nawak: I know this is a bit offtopic but what has always surprised me is that all the american bills have the same size and color!
Try having a look at the Australian Notes, all different sizes and colours (colors for the americans) and plastic to boot.
Backwards compability is generally a good thing, but if you change your bills to make them harder to copy it seems silly to me to keep the old ones in circulation. (Not to mention that having only one version of the money to be valid makes things easier for people at large.)
I thought the old Swedish money already was invalid – the original plan was for them to expire 31 Dec 2005…? And after reading the linked article on Riksbanken’s site, I see that I was right. The extended time is only the period where you still can give the old money to a bank, and they have been invalid for four months now. Good.
The euro is an important currency but if you take the number of reserves that were previously held in currencies that are part of the euro and compare it to current reserves in euros you’ll see the difference is not huge. Saying that the euro is poised to pass the dollar as the "world currency" is very debatable; most economists wouldn’t agree with that. It could certainly happen but if it does it will take many many years.
Those bills pens don’t work very well.
http://www.randi.org/jr/120304youve.html
I’ve lived in three different currency-zones now — USD, EUR, and GBP. I have to say that it’s really not that important that bills be different sizes and colours. The difference between USD and EUR/GBP that changes how you treat the currency much more is the cutoff between coins and paper. The largest USD coin in common use is .25 USD = .14 GBP = .20 EUR. OTOH, the largest GBP coin in common use is 3.59 USD = 2.00 GBP = 2.87 EUR. That means the same value of money in your pocket tends to weigh a lot more in non-USD currencies, and I think leads to people carrying around less currency.
Also, I find non-USD sized paper money difficult to fit in my wallet, but that’s possibly because I’m still carying around an American wallet.
(I also tend to not deal in paper currency much anyway, for personal reasons.)
I’m a kiwi (ie New Zealander) in the USA. I find that I accumulate a lot more coins here than I did back in NZ or at least I have to work harder to get rid of them. One reason is that in NZ prices are generally inclusive of tax and rounded to the nearest 5c so you tend to get less "oddball" amounts of change. We did away with 1c and 2c coins long ago.
I know this is a bit offtopic but what has always surprised me is that all the american bills have the same size and color!
And people are attached to it, if you try to say that various-sized, various-coloured bills are better, a lot of time they find bad reasons to defend the one-sized approach ("bad" reasons compared to the advantages of diversity) and they always end up by saying that various coloured/sized bills (ie foreign bills) look like Monopoly money to them!
The fact that they are used to bills that way is fine with me, it is ok to say that you don’t want such a fundamental change in your money! Money can be a sentimental thing!
Hey I didn’t like swapping to the Euro bills!
I really liked my Francs!
What I don’t like is when you tell them that bills that varies in size and color are easier to recognize (for everyone, but it is essential for the elderly and blind people!) or to visually count how much you have in your pocket, they reply that the-goddamn-number-is-written-in-the-corner-what-else-do-you-need-idiot, and that *they* can spot how much they have in less than a second! Well good for them! :)
I bet the same people are surprised when they are scammed with a quick swap of bills on the street…
(Sometimes I wish the US Mint would issue one-size/one-metal coins! What? Hard to differentiate? The goddamn number is written on it! ;-) )
Jorge Coelho: actually the Euro was introduced at 1.18USD per EUR, not 1.20EUR per USD. The EUR had a steep fall the year later, but has recovered and nowadays is not too far from the original value.
Marvin misses the point, let’s do a couple of experimental exercises to see why…
1. Get a new £50 note, and ten 1957 Elizabeth II £5 gold coins. Now, try to use them to buy a bottle of water and a loaf of bread in a typical British corner shop, post office or similar. It probably won’t work.
Despite the fact that the £50 note is routinely available from cash dispensers and is used in large cash transactions, you probably won’t be able to buy bread and water from small stores. They don’t like handling such large denominations and they know the law permits them to refuse any sale at their discretion.
The £5 coins are even worse. Even if the shopkeeper has heard of a £5 coin, he will see that this one is quite wrong. The color resembles that of metallic gold rather than currency, and the Queen looks so very young. It’s cold comfort that at auction you could raise enough money to buy his shop with these coins, right now he’s probably deciding whether to call the police.
2. Wait five years, then walk into the Swedish central issuing bank with a new 20 Kronor note covered in mud, an intact old 20 Kronor note, and another old 20 Kronor note which has had a corner torn off by someone else, leaving the note recognisable but badly damaged. After you offer a suitable explanation and the notes are examined they will almost certainly issue you 60 Kronor of brand new currency to spend in any shop.
The lesson is that no matter /what/ the government says is or is not money, in practice money is whatever you can actually exchange for goods and services. Governments, at least ones that plan to be around for a while, know that. This is an example of the gap between "What the documentation says" and "What actually works".
It’s probably worth telling the story of Northern Bank notes here:
Northern Bank is a private company which prints its own banknotes. They are in circulation in Northern Ireland, where they come out of ATMs and are accepted everywhere in the province (getting them accepted on the mainland is trickier, despite them having the same face value as Bank of England notes).
Recently there was a bank robbery at which over £26million of these notes were stolen from the bank’s central secure warehouse by IRA terrorists. The bank decided that this was a sufficiently large fraction of the total issued banknotes that it was worth recalling and reissuing all its notes with new designs. This made the stolen money useless and impossible to launder; while old notes could be turned in, the bank would inspect the serial numbers very carefully.
"Despite the fact that the £50 note is routinely available from cash dispensers "
Where???
I’ve never seen a cash machine vend anything other than fives, tens, and twenties, and even fives are rare.
You only get fifties from tellers, IME, and I regularly draw up to my limit from a wide variety of London cash machines.
The US does retire bills, it just doesn’t require that private citizens or companies exchange bills. They do get exchanged when they get to banks.
http://www.moneyfactory.gov/document.cfm/18/106
95% of the notes printed each year are used to replace notes already in circulation. 45% of the notes printed are $1 notes.
Here in australia, we replaced our notes completly.
We replaced the $1 and $2 with coins and the $5, $10, $20, $50 and $100 (the $100 is something you almost never see) with new high tech plastic notes.
The old notes are not legal tender anymore (IIRC) but you could probobly exchange them at a bank or something.
When I went to Belarus everyone kept piles of Amerkanski dollars to protect themselves from the devaluating ruble. I have never seen scuh fiercly competitive currency exchange booths – people would change their currency just to buy a pack of cigarettes.
There is a commodities bull market at the same time of global liquidity growth devaluing our currencies. As the intrinsic value of the commodities in a coin approach the nominal value they will be phased out or debased.
Base metal Total weight proportion proportion weight spot price usd/tonne cost(USD)
CU 4.5 0.75 3.375 7230 0.02440125
NI 4.5 0.25 1.125 18550 0.02086875
0.04527
CU 3.7 0.97 3.589 7230 0.02594847
ZN 3.7 0.025 0.0925 3229 0.000298683
SN 3.7 0.005 0.0185 9350 0.000172975
0.026420128
58%
The old coin was almost double the intrinsic USD value of the current one.
Just went on my first real trip to the US (I live in NZ), and I have to say, the pennies are such a pain. Think of the money the US could save by not manufactoring them. Think of the time saved by not having to count out the change. Think of how much lighter your wallet could be.
Also, I’m going to add another vote for plastic money. We’ve had that here (as well as Aussie) for a while and it’s fantastic. Unrippable, washable, very hard to destroy and long lasting.
While we’re on oddball money. Can anyone explain why the Aussie $1 coin is bigger than the $2?
Getting rid of the penny? You clearly don’t know about the politics and economics involved with the penny in the US. While it may seem useless (i.e. can’t use it in vending machines), there are good reasons to keep it. Furthermore, hardly anybody actually keeps change in their wallets here (most wallets aren’t even designed to hold change). Coins usually accumulate in a jar somewhere for a while and then get deposited/exchanged for bills.
A tip for non-Americans visiting America:
Convenience stores all have small trays at the checkout point; you can drop your (nearly worthless) pennies into it. After you’ve done this a few times, you may feel brave enough for step two: remove a penny or two from the dish when your bill is just a little bit over a neat amount.
For example, if the bill is $18.97, you’ll get three pennies back; drop them all into the dish. If the bill is $19.02, take two pennies from the dish.
This is an informal behaviour that started within the last twenty years or so.
Peter
PS: Do not confuse the little (generally unmarked) dish with the "tip jar": the tip jar is larger and has more coins and paper in it; these jars are for money to be given to the servers, cooks, etc. You can also put money into the tip jar, but never take any out.
New Zealand’s rational for dropping the 5 cent coin, and not having a 25cent coin.
http://www.newcoins.govt.nz/1570749.html
Headings:
Why did the Bank decide to withdraw the five cent coin?
Why do other countries have very low denomination coins?
Did the Reserve Bank consider introducing a 25 cent coin?
Peter, yeah someone told me about the penny jar. But I wasn’t brave enough. Imagine my embarassment if it turned out to be a tip jar.
I did manage to get rid of the pennies at the airport. Just bought something at the duty free. Dumped all my coins on the nice lady behind the counter, and put the rest on the Visa.
Ross: "[I]n NZ prices are generally inclusive of tax and rounded to the nearest 5c so you tend to get less "oddball" amounts of change. We did away with 1c and 2c coins long ago."
I visited Amsterdam a few years back after Holland had done away with its 1c coin. I thought it would be wonderful not to deal with all those small coins, but what I ended up with at the end of the day was a pocketful of 5c coins.
PMP