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If the euro is worth more in some parts of Europe, how are exchange rates set? Watch

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    If the euro is worth different amounts in different parts of europe, how are exchange rates set?

    Just a thought?
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    The euro isn't worth different amounts. It is a single currency.

    Could I get a source for your claims? Perhaps you have misunderstood what it was saying.

    Edit: If you are talking about how prices of goods vary between countries, it could be because of a number of reasons, some countries are better at producing certain goods ie france and wine and as such it is cheaper in this country, governments may impose different levels of tax or subsidies to certain industries.

    The euro may be relatively more valuable because you can buy more goods in one country compared to another but the euro will still buy you exactly the same amount of dollars or pounds or whatever else.
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    The euro's value is constant. Prices just change.

    E.g. a bread may cost 1 euro in holland, but 50 cents in Poland. That doesn't mean we need an exchange rate, just that there's competition on some level between the countries at different price points. Just like a bread can cost different amounts within England, e.g. in different stores.
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    in the same way sterling is, via money markets by buyers and sellers.

    Sterling has greater purchasing power in Manchester than London and more in St Helens than Manchester.

    No?
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    They probably mean as in e.g milk in one country costs €1 but in another €2, so the gernal cost of stuff

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    No, this is not what I mean. Read this article:
    http://www.ft.com/cms/s/0/67f9afde-a...#axzz2QYzkQksU

    And for those who don't have an FT account, this statistic pretty much sums it up: "Average German net assets per household are just under €200,000, while they are €300,000 in Spain and €670,000 in Cyprus."

    Explain that then?

    (Original post by dean01234)
    Could I get a source for your claims? Perhaps you have misunderstood what it was saying.
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    (Original post by JRChapman)
    No, this is not what I mean. Read this article:
    http://www.ft.com/cms/s/0/67f9afde-a...#axzz2QYzkQksU

    And for those who don't have an FT account, this statistic pretty much sums it up: "Average German net assets per household are just under €200,000, while they are €300,000 in Spain and €670,000 in Cyprus."

    Explain that then?
    WRT your orginal question the Euro isn't worth more in some parts of Europe, in the same way Sterling isn't worth more in some parts of the U.K.
    You could say a similar point about house prices and net assets between someone from central London and somebody from North Wales.

    However them stats are still shocking, the average Cypriot household has assets worth over 3 times as much as the average German household :confused:
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    (Original post by anonstudent1)
    WRT your orginal question the Euro isn't worth more in some parts of Europe, in the same way Sterling isn't worth more in some parts of the U.K.
    You could say a similar point about house prices and net assets between someone from central London and somebody from North Wales.

    However them stats are still shocking, the average Cypriot household has assets worth over 3 times as much as the average German household :confused:
    That likely takes into account Russian oligarchs which setup in Cyprus as a tax haven.

    Spain is a country with vast regional disparity, Catalonia, Madrid and the Basque region are some of the richest regions in the EU whilst Germany tends to have a higher average but less regional disparity.
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    (Original post by anonstudent1)
    WRT your orginal question the Euro isn't worth more in some parts of Europe, in the same way Sterling isn't worth more in some parts of the U.K.
    You could say a similar point about house prices and net assets between someone from central London and somebody from North Wales.

    However them stats are still shocking, the average Cypriot household has assets worth over 3 times as much as the average German household :confused:
    Cyprus is a tax haven. The median wealth is likely much lower - the presence of a few hundred Russian oligarchs skews the mean much higher. I cannot find stats for Cyprus.

    The median net worth in 2011 was 70,000 USD for the Spanish and 55000 USD for the Germans. With a household of two people, it is still much lower the average figure in both countries. The reason is that the majority of wealth in all countries is owned by a small fraction of people. And the reason why the Spanish wealth value is higher is that their welfare state is much weaker than Germany's, necessitating a larger amount of household saving in preparation for contingencies. Other variables are important to consider. For example, Germany's largely rented accommodation. Only 45% of their houses are owner occupied. In Spain, 80% of homes are owner occupied. If you take the amount of wealth the median Spaniard has tied up in an essentially non productive asset, it becomes clear that in any real sense of the term Germans are far wealthier.

    Additionally, I wonder how much of the "average" Spaniard's wealth will actually be villas lived in by expatriates?
 
 
 
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