In late 2001, German banks sold Euro Starter Kits—sealed plastic pouches with €10.23 in coins. One of many steps in the arduous process of weaning Germans from their D-Mark. I was in Germany on business at the time and bought a Starter Kit as souvenir. I still have it. It’s in the back of a drawer, next to a D-Mark coin. And that coin is part of a vast phenomenon: 13.3 billion Deutschmarks are still missing ten years after the euro made it into German wallets. 163 D-Mark per capita. But now people see a reason to hang on to them.This is where I'd normally snark on the obviousness of that last sentence but I have resolved to refrain.
While part of it is stashed in the back of drawers or rusty boxes in Germany, a good part appears to be in other countries. Guest workers took their savings home in cash, which their families kept as hard currency. A smart move in a country like Turkey where, after decades of torrid inflation, the government revalued the lira in 2005 at 1,000,000 lira to one “new lira.” Which put an end to multi-million-lira döner sandwiches. And in the Balkans, the Deutschmark was the primary currency in the 1990s. When I was in Sarajevo in 1997, even hotel bills had to be paid in cash Deutschmarks.
For those who squirreled away Deutschmarks, it’s comforting to know that notes can still be exchanged for euros at any of the branches of the Bundesbank. But the numbers are dwindling. In 2010, DEM 180 million were exchanged. In 2011, it was down to DEM 140 million.
Though people might be clinging to their marks, the euro so far has been a solid currency—despite its birth defects. In 1999, €1 bought $1.07. It then zigzagged up to $1.60 in 2008. Even in its crisis-battered condition, it’s at $1.30, up 21% from 1999. Inflation in Germany during the euro decade has been a very moderate 1.6% per year on average, or 17% for the decade—considerably lower than during Germany’s post-reunification years.
Yet German consumers have been grousing about inflation ever since the euro’s introduction. That gap between reported inflation and perceived inflation became such a concern, that the Statistische Bundesamt, which issues the inflation numbers, studied the problem (PDF report). Most prominent among its conclusions: the frequency of a purchase impacts the perception of inflation....MORE
[he can't figure out how to do a German colloquialism for Department of Duh -ed]