Things I noticed giving up the Crown for the Euro

On January 1, 2009 the Euro became the official currency here in Slovakia replacing the Slovak crown.

1. Before the switch
There was nervousness long before the D date about price increases. The government and media kept telling people how worried they are about businesses "abusing" the switch to enact "unwarranted" price increases.

One of the key economic news topics in December was what was not going to work after the switch. The banks had arrangements in place to shut down some services (internet banking for a few days) and ATM machines for a few hours.

Oh, and Google screwed Slovak Adwords advertisers (while Moneybookers didn't (in Slovak).

2. The giddy Day One
I shopped at my local Tesco on January 2 (January 1 is a holiday). I paid in crowns but received my change in euros. In this way within two days all the crowns in my wallet were gone and I was 'switched'.

The cashiers asked everyone whether they would be paying crowns or euros. Some people said Euros with a proud smirk. It was a funny feeling, yet another important marker on our way to become 'first class' Europeans.

ATM machines here supposedly usually have slots for four notes. The banks reportedly fed the euros in two slots a few days before the New Year, minimising the downtime required to switch. For a few days you were only able to get EUR 50s and 10s in some machines or 20s and 10s.

3. Nominal schnominal?
I am trained as an economist and I know there is no money illusion and nominal does not matter to a rational person. Nominal of course does matter (and there are loads of evidence in behavioural economics literature).

We tipped by rounding up in crowns before. E.g. you'd leave 100 on an 82-95 crown bill. Traditionally people would simply round up to the nearest 10 and in recent years in classier establishments to nearest 20, 50 or even 100.

With euros, even rounding up to the nearest euro sounds cheap to our ear yet a euro is 30.126 crowns. So people first did not tip at all, I believe out of fear of under or overtipping. I tipped a taxi driver who delivered sushi a little over a euro towards the end of the first euro-week. He told me this was his first tip in the New Year and other taxi drivers confirmed people had ceased up tipping.

With the government sponsored price abuse hysteria, many businesses are keeping weird an uneven euro prices to avoid any semblance of the derided 'machinations during switch from crown to euro'. This is inefficient and annoying but sooner or later I am sure this will stop.

There are some data probably interesting for economists on what portion of currency in circulation was withdrawn within the first fifteen days through retail shops. There is other data on people bringing in cash to the bank days before the switch to have it converted seamlessly and legends of dodgy cash buyers of expensive apartments helping fuel our real estate bubble.

We have made the switch now complaint of the day seems to be that we have to now carry too many coins and they don't fit in a normal wallet (I would add the bills don't fit in the beautiful and RFID-fraud safe Flipside Wallet (TM)).

Markets are tough, Slovak bank clients learn

Before the Slovak crown's exchange rate to the Euro was fixed (to 30.126 crowns per euro) two major Slovak banks offered clients deposit instruments with high guaranteed interest rate.

Of course there was a reason these deposits carried rates over 5%, well over one percentage point above any other similar guaranteed deposit. The deposits included a speculation on the Slovak crown's eventual fixed rate to the Euro.

In July the exchange rate was revealed. The crown ended up stronger to the Euro than most had expected even a few months ago. Suddenly, Slovenska Sporitelna bank Grand deposit clients are finding out that they will be making their 5+ % interest but their deposit will be converting at the fixed rate of SKK 32.5 per EUR (the same rate applies to clients of the "Premiovy vklad" at Slovak Volksbank).

At Slovenska Sporitelna a 100,000 Sk in the Grand Vklad (which also drew a 500 Sk fee at the start) will become EUR 3,231. Had they kept their cash under the mattress they would be converting to EUR 3,319 (via eTrend). Aside from the fact that these deposit reportedly attracted about 3 billion crowns, a 2.65% loss is not a bad price to learn a bit about how the markets work.

People and companies are coming forward claiming they were not properly shown or explained the fine print. The obvious lesson: if it sounds too good to be true (or is so much more attractive than the competition in a relatively competitive market) there is a risk. And risks sometimes do materialise.

Where the hell is my ATM?

Me: There used to be an ATM here, now there is just some cable sticking out from a hole in the tiles. So I thought I would let you know. I mean maybe someone stole it or something?

Tatra Banka Dialog Call Center Lady: I don't thinks so [with a 'I am not really hired to deal with silly jokes tone].

Anyway, my Tatra Banka bankomat at the Bratislava Radisson (I don't live AT the Radisson, just near it) has disappeared. No sign, just a hole in the floor tiles with some cable sticking out. The call centre lady had no idea about the ATM, she was simply able to list where ATM's are available at present.

If the bank were to act somewhat sensibly they could:
1. mine the data for customers who were repeat users of that bankomat,
2. notify them of why this one is disappearing, whether and when it will be back and where the nearest one is,
3. put up a little note,
4. inform their call centre.

Now this would be too customer focused even for what in my view is Slovakia's most customer-focused bank.

UPDATE: Having blogged this, I decided to pursue it further, even at the risk of acting slightly ridiculous. I sent off a question through a contact form at Tatra Banka's website and received an automated reply promising that I will be contacted ASAP. As an interesting aside, the www address in the signature of the automated message pointed to an advertising feature of Tatra Banka's Bank+Coffee, rather than the bank's main website.

UPDATE 2: Not too many days later I have heard back from an ATM business specialista:
"With regrets we must inform you that the bankomat has been deinstalled permanently from these premises. At the same time we want to assure you that we plan to replace the deinstalled bankomat, in a nearby object. If we have caused you any problems please accept our apology."

Next time I will translate my response to the ATM business specialista.