“Latvian people are very practical people as is their view on euro in regard to situations with clean financial gains. Latvians are a proud nation – they like it when their Milda is is the same wallet as other currency. Finally, Latvians do not like to joke when it comes down to their finances, and even though some residents like to say that their salaries will grow at least numerically after the adoption of euro, getting used to a new currency makes some residents cautious,” – says Swedbank Private Finances Institute Director Adriāna Kauliņa.
Have a look a ten situation when Latvians like euro:
1.When residents need a housing loan
According to statistical information compiled by the Bank of Latvia, 86% of all banking loans issued to households were in euro currency. The choice in favour of euro is governed by interest rates. They have always been some of the lowest in regard to euro.
This July, 42.6% of all household deposits were made in euro currency. Savings in euro are more often made as part of a plan to not put all eggs in one basket. Often Latvian residents and companies thought is such a way in 2009, when there were doubts about the stability of lat as a currency.
3.When residents need to perform money transfer operations to other Eurozone countries
While Latvian companies mostly use euro as payment for goods and services, residents do not have that much need to use euro on a daily basis. Less than half of Latvian respondents purchase things at foreign internet shops. Less than one-third of respondents perform money transfer operations to foreign countries in euro.
4.When residents travel to other countries of the world, not just European ones
Euro adoption will make life easier for travellers – when going to Eurozone countries, currency exchange will no longer be on the list of priorities for travellers. Also, unlike lats, which are only accepted in the closest of neighbouring countries, euro can be exchanged in any country of the world.
5.When paying for things with a bank credit card abroad
The actual amount a person is paying with his or her credit card when buying things abroad is largely unknown until they take a look at their balance – it can be difficult to convert lat into euro on the spot. Also, when paying for something with non-native currency, the bank can add commission payments on the transaction. With the adoption of euro, the practice of currency exchange in other European countries will be no more for Latvians. This means there will no longer be any currency exchange expenses and commission for currency exchange.
6.Residents will be able to pay for things in German, French and Spanish shops with beautiful Milda and create a collection of euro coins from other European countries
Special edition lat coins issued by the Bank of Latvia have been welcomed very warmly by Latvian families – 80% of families tend to create little collections. The Bank of Latvia aims to keep to this tradition – joining Eurozone brings new opportunities with different coin design ideas.
7.Euro adoption will allow more accurate quality of life comparison with other countries
Latvians like to compare things – prices on food, clothes and fuel, etc. Euro adoption will allow banks to compare and contrast expenses in Latvia and other countries.
8.Salaries calculated in euro will be numerically larger
Every Latvian resident who is currently paid a salary of LVL 351.03 will be paid EUR 504.92 starting January 2014. This increase is estimated to be an increase at the expense of the planned tax changes and the expression in euro. Nevertheless, residents will need to think about their expenses, not illusions.
9.Prices for services and goods will seem larger in euro, which will encourage residents to save money
“Instead of the usual 60 santim for scones, residents will see 85 cents – we can live without it! Shampoo for LVL 1.95 now costs EUR 2.78 – got anything cheaper?” Surveys show – tourists usually spend less money in countries where the local currency is worth less than in those where domestic currency is more valuable than the tourists’ home country’s national currency.
10.When pooling money for drinks will be cheaper
According to other Eurozone countries’ experience, some time after euro adoption, Latvians will still keep in mind their usual habits with lat. For example, having to withdraw LVL 20 from an ATM, residents will withdraw EUR 20, even though the equivalent of LVL 20 is somewhere around EUR 30. Getting used to a new currency will take time: according to Eurobarometer data, four years into euro adoption and 47% of residents still found it difficult to get used to euro.