Success with Wise money transfer

by philg

In Finally a use case for cryptocurrency? (currency conversion fees), Tim suggested Wise as the, um, wise way to transfer dollars to euro-denominated accounts overseas. I recently used this to pay a roughly $700 bill over in Portugal (where what we would call ACH transfer is apparently the standard way to pay) and it was done within hours for a fee of $44 (Bank of America’s hidden fees would have been closer to $200).

If you want to transfer some money away from the galloping inflation of the U.S. dollar, Wise seems like a reasonable option. The euro per se, however, is probably not the best currency to choose for inflation protection. They have the same fraudulent way of computing inflation, in which the cost of buying a house is excluded (Reuters) and their money printing during coronapanic has generated roughly 5 percent annual inflation. Right now Japan and Switzerland are looking good in a ranking of countries (the U.S. is down with Mexico, Russia, Brazil, Turkey, and Argentina). One thing that I don’t understand is how Germany and France can use the same currency, be right next to each other, and yet have substantially different inflation rates (5.2 percent and 2.8 percent).

Remember, though, that you might have to file some additional IRS forms if you own foreign financial accounts/assets (looks as though real estate is exempt, but not a real estate investment trust, for example).

(A potential inflation hedge in Gruyères, Switzerland. Cheese not included.)

10 thoughts on “Success with Wise money transfer”

  1. Here states-side we called structures similar to one depicted above “barns”. But they are usually painted red.

    • If you’re lucky enough to find yourself in proximity to that barn, make sure to tour the Cailler chocolate factory nearby in Broc — unlimited free samples! (Lived in Geneva for several years, and we were sure to hit that place up twice/year with our three kids, and whenever we had houseguests.)
      https://youtu.be/_nRLhcAdj1I

    • Thanks Suzanne – have family in Geneva but never heard about Cailler factory. Doubt I would ever visit Switzerland – I would be there only as a prole living in cramped overpriced apartment helping others to make money or at best as a mid-level figurehead beholden to others. So I am going with Hershey factory and US barn tours, before departing for places where global warming has already warmed up seas to 70 degrees Fahrenheight.

  2. Home ownership is excluded from US’s CPI too. Lions treat fiat money the same as stonks. When other animals are dumping it, we prefer to buy it. The lion kingdom tends to agree with analysts that no-one is going to win. When considering euro exposure, lions always think about the Airbus A380 & the european tax on camcorders which record over 30 minutes.

  3. ‘Germany and France can use the same currency, be right next to each other, and yet have substantially different inflation rates”

    Most likely explanation for the difference is rapidly rising energy cost in Germany. Electricity in France is about 40% cheaper than in Germany for rather obvious reasons.

    Neither the ECB nor the Federal reserve “print money”. Therefore, something that does not exist cannot be a reason for increased inflation. The open market operations(buying/selling bonds to adjust the short term interest rate and provide liquidity for interbank clearing) is not printing money. ECB is given more leeway with OMO in that it can trade corporate bonds and the Feds cannot.

  4. Yes, ACH or “wire transfer” is the standard way to pay in nearly all countries in Europe. We have got rid of cheques a long time ago. Still, $44 for a $700 is a gigantic rip-off.

    Unlike our American brothers that benefit from a functioning free market and real competition, in the EU we are oppressed by big government, with onerous regulations and red tape. For example, to do a standard SEPA bank transfer to any bank in any EU country, most banks in Portugal charge about 1 EUR for transfers up to 100,000 EUR. And even before the EU there was never an “incoming transfer fee”, so common in the US.

  5. You would not think that “fraudulent” ways of computing inflation would have much to do with the strength of a particular currency as against another currency since you would think that currency traders would make whatever adjustments are necessary in computing the value of one currency as against another. These “fraudulent” methods of computation are not exactly secret so how can’t they be priced in?

    • ” computing the value of one currency as against another” sounds good in theory but in practice predicting a c.c exchange rate is notoriously difficult (and dangerous for the player). Two ways (maybe three if you add rolling the dice which subsumes the rest) are interest rate parity and purchasing power parity principles none if which is satisfactory with the latter being somewhat more reliable.

      https://pages.stern.nyu.edu/~nroubini/NOTES/CHAP7.HTM

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