Dollars are Preferred to Euro Banknotes

Currency exchange rates are much in the news these days, with concerns over the stability of the euro (given the fiscal problems in Greece, Spain, Portugal, Italy, and Ireland) and the pound in the United Kingdom.

The euro came into being in 1999 as a virtual currency with euro notes and coins placed in circulation in 2002. Sixteen European countries are members of the eurozone. Monaco, San Marino, and Vatican City use the notes by monetary agreement, and Andorra, Montenegro, and Kosovo on a unilateral basis.

As of January 2010, €783.5 billion were in circulation. Of the seven denominations (5, 10, 20, 50, 100, 200, and 500), large notes of €100 and above constituted 58.9 percent of the value of banknotes in circulation. The European Commission estimated that 10-20 percent of euro notes circulated outside the zone, of which some circulate in the six affiliated jurisdictions.

As of January 2010, $860 billion of U.S. notes were in circulation, of which $100 notes made up 79.5 percent of the total value. Recent estimates of dollars circulating offshore range between 30-37 percent. A relatively small amount circulates in countries which use the dollar as legal tender: Ecuador, Panama, El Salvador, and East Timor. Several independent Pacific Island jurisdictions use the dollar along with two British Caribbean territories.

As a medium of exchange outside the respective dollar and euro zones, the dollar is still the preferred currency. This despite the fact that a €500 note is worth $675, making it easier to use euros to carry large amounts of cash (legally or illegally).