Estonia: Crowns, euros, roubles… and chaos
11 August 2010
In the Estonian town of Narva, situated on the Russian border, the coming changeover to the euro (on 1 January, 2011) has already created discord among the members of the Russian-speaking community. It would seem that Tallinn authorities somehow neglected to inform them of this event, which has pleased bankers no end, as they extract a maximum of profit from the confusion surrounding the exchange rates of the crown, the euro and the rouble.
In this context, rumours of all sorts are circulating around Narva. Some believe that denominations smaller than one Estonian crown will not be exchanged, or perhaps at a lower rate. Others say that there will be cash shortages or a lack of smaller bills in the stores when the euro takes over.
These rumours could incite "babouchkas" to run, with their grandchildren in tow, to exchange all their coins for banknotes at the only bank in town equipped with a machine for counting coins. Why bring the grandchildren? Because for them, the service is free of charge. In the rush, many have already exchanged their Estonian crowns for euros, anticipating an eventual rise in the exchange rate this fall.
Moneychangers with few scruples
Currency-exchange offices, much better informed and rather numerous in this border town, display exchange rates to their liking. The most absurd rumour going around concerns the price of the rouble, that it will rise as well. On this subject, there are as many "experts" as there are explanations: "Prices rose in Finland when the euro arrived. Prices are already rising in Estonia. (...) If prices are rising everywhere, then why not that of the rouble?"
For a great number of Estonians here, Russian currency remains an important means of payment, as it facilitates buying and selling across the river on a daily basis. It is therefore a very important issue for the local population. Logically, once the euro arrives, the rouble will be less expensive. But for the moment, currency exchanges are exploiting these rumours in order to "play" with the exchange rates of the three currencies, thoroughly confusing the people of Narva. Only after the Estonian crown is taken out of circulation will the true exchange rate between the euro and the rouble become stable, at least in the minds of the Estonians.
To rectify this situation, Estonian authorities urgently need to do everything possible to stem the propagation of the nonsense and rumours, which led one elderly lady to tell me: "Personally, I will exchange all my money for roubles in December, because you never know...".