Expert: Dmitry Livshits - 10/7/2009

Question
QUESTION: I am doing research into the values of pre-euro coins vs. euro's. Really it's not that specific. Throughout history currencies have changed. I know it depends on a lot more than when and where it came from. My question relates to the current situation in the US. The dollar is dropping and it has been rumored that the US currency will be replaced by another form. If such a transition occurs what happens to the value of the old currency?

ANSWER: Hi Scott,
Typically during such a currency transition the government of a particular nation will allow a "courtesy" period during which individuals may exchange the old currency based on the transition rate.
For example, in early 1993 Russia had beat back inflation by changing the old currency (RUR) to the new (RUB) at an exchange of 100 of the old rubles to 1 of the new. People were given about 6 months to exchange, after which the old money became worthless.
Another example is Germany, where federal banks still accept the old marks and pfennigs in exchange for their value in euros.
An interesting point about the dollar... it's no longer considered the most widely recognized currency in the world. The euro has overtaken that title.
If the dollar was to transition, I suspect the government will give about a 2 year grace period where there will be two simultaneous currencies. Eventually the dollar will be completely demonetized.
Demonetization does not always accompany such a transition. The Swiss still use their own currency, CHF. However, in 2004 they demonetized many of the smaller denominations, such as their 5, 10 and 20 cent coins. These are not exchangeable for anything and also are no longer spendable legal tender.
I hope that about covers everything.
Thanks for the question! =)

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QUESTION: Do you have an opinion about the value to the collector if transition occurs?

Answer
Collectible currency items will not be negatively affected. They should continue to appreciate in value as they have historically done. If anything, obsolete currency is more collectible. Much the same principle as when a famous individual's autographs appreciate in value after their death.
Thanks again! =)