Remember when travelling to Spain meant changing your money for Pesetas? It seems that quite a few Spaniards would prefer that was still the case, rather than the ubiquitous Euro, which has been the official currency of the country since the 1st of January 2002. Recent research conducted by the European Commission itself has revealed that a surprising 54% of Spaniards admit to not managing the Euro very well. The Minister for the Economy, Pedro Solbes, interpreting the findings of this study, went on to say that many of his compatriots still don’t feel comfortable about using the Euro, with some people fearing that they were spending too much in the “new” currency, while others worried they could be spending too little.
The Commission’s questionnaire included a section designed to find out how the introduction of the Euro had changed consumers’ habits. Questions asked included: “Do you buy less because you fear spending too much?”, “Do you buy more because you don’t know how much you are spending?” and “Does the Euro make little difference to your spending habits?”.
Only 45% of those Spaniards questioned were able to manage the Euro in the same way as the Peseta while 28% of those questioned confessed to spending more because they didn’t understand the true value of the Euro and 26% admitted that they spent less because they feared they would go over their budget.
It’s perhaps a little strange that the Spanish of all people should experience such a difficulty in adjusting to a “new” currency. The Peseta, after all was hardly that long-established the country-wide legal tender in Spain. In fact, the Peseta was not introduced until 1869 and even then scholars still argue about the origins of the word itself. Probably the most popular school of thought is that it comes from a Catalan word peçeta, meaning “little piece” (i.e. the diminutive form of peça,
-eta being the usual feminine diminutive. However it is also likely that the name is the diminutive of peso, an already-existing currency whose name derives from a unit of weight. This is consistent with other currencies, such as the British pound.
The peseta was introduced in 1869 after Spain joined the Latin Monetary Union in 1868. The peseta replaced the escudo at a rate of 2½ pesetas = 1 escudo. At the time of its introduction, the peseta was equal to 4.5 grams of silver or 0.290322 grams of gold, the standard used by all the currencies of the Latin Monetary Union, and from 1873, only the gold standard applied. The political turbulence of the early 20th century caused the monetary union to break up, although it was not until 1927 that the union came to an official end.
In 1959, Spain became part of the post-war American Bretton Woods System, pegging the peseta at a value of 60 pesetas = 1 U.S. dollar. In 1967, the peseta followed the devaluation of the British pound, maintaining the exchange rate of 168 pesetas = 1 pound and establishing a new rate of 70 pesetas = 1 U.S. dollar. All in all therefore, recent generations of Spanish consumers have had to contend with quite a few changes and fluctuations not only in the name of the money they happen to be spending, but also its relative value.
Perhaps the current difficulties revealed by the recent European Commission study says something about difficulties inherent in the Euro itself, since research has shown that not being able to manage the Euro very well appears to be a widespread problem throughout the Eurozone. Apparently, only 41% of citizens said that they managed the Euro with the same ease with which they had managed their domestic affairs with their own former national currency.
The general picture seems to be that people who overspend as a result of failing to appreciate the true value of the Euro consistently outnumber those who under spend. However, the findings for Spain were the opposite, with 58% of Spaniards included in the European Commission’s study admitting to spending less for fear of going over budget and only 25% admitting to overspending.
It seems that the country with the least problems in adapting to the Euro is Portugal where 57% of those questioned were happy using the Euro. Ireland was found to be the country which had experienced the most problems adapting to the Euro with only 28% of those questioned comfortable with managing the Euro with the same ease as their own former national currency.
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Despite women’s fabled propensity for “retail therapy”, the European Commission’s study found that women were more cautious than men in their spending habits and that the elderly seemed less concerned about any over- or under-spending then the young. No significant differences were found in regards to people’s educational background.
I’m not sure that all of this actually tells us a great deal; still less clear is just how much the study itself would have cost. Having had a new European currency foisted upon them, and apparently struggling somewhat to manage the transition, it’s not as though the consumers of Spain are ever likely to regain their Peseta – but we’ll all be continuing to fund the myriad varieties of research just like this conducted on our behalf by the European Commission.
