Personal Finance Q & A

The Euro's Impact on American Travellers

Q We are organizing a trip to Italy and Greece in the summer of 1999. How will the currency changes in Europe affect us and exchange rates?

- R.A., Wilmette, Ill.

A The move by Western European countries to a single currency, the euro, will affect you, but not much, according to the European Commission and American Express.

It's a little bit complicated, since not all European countries will use the euro.

The actual euro bills won't hit the streets until 2002. Still, exchange rates that link local currencies and the euro will kick in January 1999 for participating countries - including Italy but not Greece.

The Italian lira will be directly linked to the euro. When you get to Italy, you'll still use the lira, but its value will no longer be determined by its relationship to the US dollar. The lira's exchange value will be determined by the value of the euro.

The value of the Greek drachma will still be pegged to the dollar.

So before your trip, when you look up exchange rates in the paper, you'll see the lira quoted in terms of the euro, and the drachma quoted in terms of the dollar.

In practical terms, says Chris Matthews of the European Commission, you will probably not want to load up on liras and drachmas here, unless you believe the dollar is about to plummet sharply in value. You'll likely be better off converting your money over there.

Q What proportion of money invested in the New York Stock Exchange (NYSE) comes from mutual funds, institutions, the companies themselves, and individuals?

- M. & D. Curtis, via e-mail

A According to a spokesman for the Federal Reserve, in Washington, there was a total of $13 trillion worth of outstanding stock shares in the US at the end of 1997.

These are stocks traded on all US exchanges, however, not just the NYSE (whose information is not current).

Of those shares, individuals and households held the most - shares worth $5.7 trillion. Mutual funds directly held shares worth $2.1 trillion; institutional investors, including pension funds, held shares worth $3.1 trillion; insurance firms, $800 billion; banks, $300 billion; and foreigners owned $900 billion worth. Brokers and dealers held the small change remainder.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com