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Currency in Germany: The Euro
Germany's currency is the Euro (currency symbol: €), which replaced the traditional Deutsche Mark (also known as Deutschmark or DM) in 2002.
The Euro is the only generally accepted currency in Germany. In the border regions with non-Euro countries (currently Czech Republic, Denmark, Poland and Switzerland) you might encounter situations where the neighbouring country's currency is accepted, and in certain high-traffic tourist areas popular "tourist currencies" such as the US Dollar might be accepted by gift shops and hotels. In Berlin however, the Euro reigns supreme, and US Dollars, British pounds etc. will only be worth anything if you change them at a Bank or Bureau de Change.
There are seven Euro banknote denominations (€5, €10, €20, €100, €200, €500). Each has a distinctive size and color. Unlike the Euro coins, the design of both front and back is uniform cross the Euro countries, and each note shows a typical example of European architecture (although none of the designs depicts an actual building or monument!).
Euro notes are considered hard to forge, but retailers are usually very careful when accepting notes, and will often pass them under an ultra-violet light to check their validity. If you suspect you have a counterfeit, don't try and spend it - the shop will inform the police very quickly. If in doubt, take the notes to a bank or if possible the place you got them from.
Spending Euro notes and coins
Shopping in Germany is still very cash-based and you'll need to have a supply of Euro notes and coins on you all the time. If you're not careful the smaller "copper coins" (1, 2 and 5 cent) will quickly build up: if you don't want to give them away (some shops have "charity boxes" located conveniently at the counter), most shops are happy to accept payment for your purchases in exact change. Note however that retailers are required by law to accept a maximum of 50 coins per purchase (there is of course no limit on the amount of notes you can use). 5 cent coins can also be used in many vending machines.
Smaller retailers are sometimes unwilling to accept the larger denomination Euro notes (€100 and above) - partly due to the risk of accepting a forgery, but mainly due to lack of change - and may actually post a notice that they will not take them. ATMs / cash machines usually issue notes in denominations of €10 and upwards: if you want to be sure of getting smaller denomination notes, withdraw an "odd" sum such as €40.