Redenomination
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Redenomination is the process of changing the face value of banknotes or coins used in circulating currency. It may be done because inflation has made the currency unit so small that only large denominations of the currency are circulated. In such cases the name of the currency may change or the original name may be used with a temporary qualifier such as "new". Redenomination may be done for other reasons such as adopting a new currency as with the Euro or decimalization. The article deals with these various types of redenomination in detail.
Inflationary
In times of inflation, the same number of monetary units have continually decreasing purchasing power. In other words, prices of products and services must be expressed in higher numbers. If these numbers become excessively large, they can impede daily transactions because of the risk and inconvenience of carrying stacks of bills, or the strain on systems, e.g. automatic teller machines (ATMs), or because human psychology does not handle large numbers well. The authorities may alleviate this problem by redenomination: a new unit replaces the old unit with a fixed number of old units being converted to 1 new unit. If inflation is the reason for redenomination, this ratio is much larger than 1, usually a positive integral power of 10 like 100, 1000 or 1 million, and the procedure can be referred to as "cutting zeroes".[1] Recent examples include
| New unit | = | × | Old unit | Year |
|---|---|---|---|---|
| Fourth Zimbabwean dollar (ZWL) | = | 1 000 000 000 000 | ZWR | February 2009 |
| Third Zimbabwean dollar (ZWR) | = | 10 000 000 000 | ZWN | August 2008 |
| Second Zimbabwean dollar (ZWN) | = | 1 000 | ZWD (first dollar) | August 2006 |
| New Mozambican metical | = | 1 000 | old meticais | 2006 |
| This table is not exhaustive. | ||||
Although the ratio is often a positive integral power of 10, sometimes it can be a×10n where a is a single-digit integer and n is a positive integer. Partial examples include
| New unit | = | × | Old unit | Year |
|---|---|---|---|---|
| Rentenmark | = | 1 000 billion | Papiermark | 1923 |
| Chinese "gold" yuan | = | 3 million | old yuan | 1948 |
| Chinese "silver" yuan | = | 500 million | "gold" yuan | 1949 |
| New Taiwan dollar | = | 40 000 | old dollars | 1949 |
| Azerbaijani new manat | = | 5 000 | old manat | 2006 |
| This table is not exhaustive. | ||||
Occasionally, the ratio is defined in a way such that the new unit is equal to a hard currency. As a result, the ratio may not be based on an integer. Examples include
| New unit | = | × | Old unit | = | Anchor currency | year |
|---|---|---|---|---|---|---|
| Brazilian real | = | 2 750 | cruzeiros reais | = | United States dollar | 1 July 1994 |
| Yugoslav novi dinar | = | 10~13 million | 1994 dinara | = | Deutsche Mark | 24 January 1994 |
| This table is not exhaustive. | ||||||
In the case of hyperinflation, the ratio can go as high as millions or billions, to a point where scientific notation is used for clarity or long and short scales are mentioned to disambiguate which kind of billion or trillion is meant.
In the case of chronic inflation which is expected to continue, the authorities have a choice between a large redenomination ratio and a small redenomination ratio. If a small ratio is used, another redenomination may soon be required, which will entail costs in the financial, accounting, and computing industries. However a large ratio may result in inconveniently large or small prices at some point in the cycle.
After a redenomination, the new unit often has the same name as the old unit, with the addition of the word new. The word new may or may not be dropped a few years after the change. Sometimes the new unit is a completely new name, or a "recycled" name from previous redenomination or from ancient times.[citation needed]
| New unit | = | × | Old unit | year | Nature of the new unit |
|---|---|---|---|---|---|
| Turkish new lira | = | 1 million | old lira | 2005 | "new" is an official designation and was dropped in 2009. |
| New Taiwan dollar | = | 40 000 | old dollars | 1949 | "new" is an official designation and is still used in official documents today. |
| Argentine austral | = | 1 000 | Peso argentino | 1985 | completely new name |
| Yugoslav 1993 dinar | = | 1 million | 1992 dinara | 1993 | no official designation |
| Brazilian real | = | 2 750 | cruzeiros reais | 1994 | recycled unit of Brazil before 1942 |
| This table is not exhaustive. | |||||
Decimalisation
The currency was decimalised in all countries where a pounds-shillings-pence £sd system (£1 = 20 shillings = 240 pence) was previously used. Several countries chose to change the main currency unit at the same time. By defining 1 dollar = £0.5 = 100 cents, 1 shilling would conveniently turn into 10 cents.
| New unit | = | x | Old unit | year |
|---|---|---|---|---|
 German gold mark
|
= | 1/3 | Vereinsthaler | 1873 |
 (New) Penny
|
= | 2.4 | Penny | 1971 |
 South African rand
|
= | 0.5 | South African pound | 1961 |
 Australian dollar
|
= | 0.5 | Australian pound | 1966 |
 New Zealand dollar
|
= | 0.5 | New Zealand pound | 1967 |
| This table is not exhaustive. | ||||
Monetary union
When countries form a monetary union, redenomination may be required. The conversion ratio is often not a round number, and may be less than 1.
| New unit | = | x | Old unit | year | Monetary union |
|---|---|---|---|---|---|
| Danish krone | = | 0.5 | Danish rigsdaler | 1873 | Scandinavian Monetary Union |
| Gulden österreichischer Währung | = | 20/21 | Gulden Conventions-Münze | 1858 | Wiener Münzvertrag between the states of the German Customs Union and the Austrian Empire |
| Euro | = | 0.787564 | Irish pound | 1999/2002 | Eurozone |
| Euro | = | 40.3399 | Belgian or Luxembourgian francs | 1999/2002 | Eurozone |
| This table is not exhaustive. | |||||
List of Euro redenominations
| Exchange rate (Euro in units of old currency) | Old unit | Year | Country |
|---|---|---|---|
| 40.3399 | Belgian or Luxembourgian francs | 1999 | Belgium / Luxembourg |
| 1.95583 | Deutsche Mark | 1999 | Germany |
| 166.386 | Spanish peseta | 1999 | Spain |
| 6.55957 | French Franc | 1999 | France |
| 0.787564 | Irish pound | 1999 | Ireland |
| 1936.27 | Italian lira | 1999 | Italy |
| 2.20371 | Dutch guilder | 1999 | Netherlands |
| 13.7603 | Austrian schilling | 1999 | Austria |
| 200.482 | Portuguese escudo | 1999 | Portugal |
| 5.94573 | Finnish markka | 1999 | Finland |
| 340.75 | Greek Drachma | 2001 | Greece |
| 239.64 | Slovenian tolar | 2007 | Slovenia |
| 0.585274 | Cypriot pound | 2008 | Cyprus |
| 0.4293 | Maltese lira | 2008 | Malta |
| 30.126 | Slovak koruna | 2009 | Slovakia |
| 15.6466 | Estonian kroon | 2011 | Estonia |
| 0.702804 | Latvian lats | 2014 | Latvia |
| 3.4528 | Lithuanian litas | 2015 | Lithuania |
List of currency redenominations
This table lists various currency redenominations that have occurred, including currency renaming where the conversion rate is 1:1, but excluding decimalisation.
| New unit | Exchange rate (new:old) | Old unit | Year | Country | Cause | Note |
|---|---|---|---|---|---|---|
| Zimbabwean Dollar (4th) | 1 000 000 000 000 | Zimbabwean Dollar (3rd) | 2009 | Zimbabwe | hyperinflation | Subsequently abandoned. |
| Zimbabwean Dollar (3rd) | 10 000 000 000 | Zimbabwean Dollar (2nd) | 2008 | Zimbabwe | hyperinflation | |
| Chinese "silver" yuan | 500 000 000 | "gold" yuan | 1949 | China (Republic of China) | inflation | |
| Chinese "gold" yuan | 3 000 000 | (old) yuan | 1948 | China (Republic of China) | inflation | |
| Peruvian nuevo sol | 1 000 000 | Peruvian inti | 1991 | Peru | hyperinflation | "nuevo" is an official designation and is still in use |
| Yugoslav 1944 dinar | 20 | Serbian 1941 dinar | 1944 | Yugoslavia | Reconstituted Yugoslav Federation dinar replacing currency in use in its constituents | |
| Yugoslav 1944 dinar | 40 | Independent State of Croatia kuna | 1944 | Yugoslavia | Reconstituted Yugoslav Federation dinar replacing currency in use in its constituents | |
| Yugoslav 1966 dinar | 100 | 1944 dinara | 1966 | Yugoslavia | inflation | |
| Yugoslav 1990 dinar | 10 000 | 1966 dinara | 1990 | Yugoslavia | inflation | |
| Yugoslav 1992 dinar | 10 | 1990 dinara | 1992 | Yugoslavia | inflation | |
| Yugoslav 1993 dinar | 1 000 000 | 1992 dinara | 1993 | Yugoslavia | hyperinflation | no official designation |
| Yugoslav 1994 dinar | 1 000 000 000 | 1993 dinara | 1994 | Yugoslavia | hyperinflation | Lasted for 23 days. |
| Yugoslav novi dinar | 13 000 000[2] | 1994 dinara | 1994 | Yugoslavia | hyperinflation | Anchor currency: Deutsche Mark |
| Turkish new lira | 1 000 000 | Turkish lira | 2005 | Turkey | inflation | "new" is an official designation and has been dropped in 2009[needs update] |
| Hryvnia | 100 000 | Karbovanets (third) | 1996 | Ukraine | inflation | |
| New Taiwan dollar | 40 000 | Taiwan dollars | 1949 | Taiwan (Republic of China) | inflation | "new" is an official designation and is still used in official documents |
| Second Renminbi yuan | 10 000 | First Renminbi yuan | 1955 | China (Peoples Republic of China) | inflation | |
| Peso argentino | 10 000 | Peso ley | 1983 | Argentina | inflation | |
| Peso (convertible) | 10 000 | Austral | 1992 | Argentina | inflation | |
| Polish złoty | 10 000 | Polish złoty | 1995 | Poland | inflation | |
| Leu | 10 000 | Romanian leu | 2005 | Romania | inflation | |
| New Ghanaian cedi | 10 000 | Cedi | 2007 | Ghana | inflation | |
| Second Azerbaijani manat | 10 | Soviet ruble | 1992 | Azerbaijan | Independence | |
| Azerbaijani new manat | 5 000 | Second Azerbaijani manat | 2006 | Azerbaijan | inflation | |
| Turkmenistani new manat | 5 000 | (old) manat | 2009 | Turkmenistan | inflation | |
| Real | 2 750 | Cruzeiro real | 1994 | Brazil | inflation | Anchor currency: United States dollar |
| Cruzeiro (antigo) | 1 000 | Real (old) | 1942 | Brazil | inflation | |
| Cruzeiro (novo) | 1 000 | Cruzeiro (antigo) | 1967 | Brazil | inflation | |
| Austral | 1 000 | Peso argentino | 1985 | Argentina | inflation | |
| Peruvian inti | 1 000 | Peruvian sol (1863–1985) | 1985 | Peru | inflation | |
| Cruzado | 1 000 | Cruzeiro (novo) | 1986 | Brazil | inflation | |
| Cruzado Novo | 1 000 | Cruzado | 1989 | Brazil | inflation | |
| Cruzeiro real | 1 000 | Cruzeiro (third) | 1993 | Brazil | inflation | |
| New Shekel | 1 000 | Shekel | 1986 | Israel | inflation | |
| Russian ruble | 1 000 | Rouble | 1998 | Russia | inflation | |
| Bulgarian new lev | 1 000 | Bulgarian lev | 1999 | Bulgaria | inflation | Anchor currency: German mark |
| Belarusian ruble | 1 000 | Rouble | 2000 | Belarus | inflation | |
| New Mozambican metical | 1 000 | (old) meticais | 2006 | Mozambique | inflation | |
| Bolivar Fuerte | 1 000 | (old) Bolivar | 2008 | Venezuela | inflation | |
| Zimbabwean dollar (2nd) | 1 000 | Zimbabwean dollar (1st) | 2006 | Zimbabwe | inflation | |
| Slovenian tolar | 1 | Yugoslav 1990 dinar | 1991 | Slovenia | Independence | |
| Euro | 239.64 | Slovenian tolar | 2007 | Slovenia | monetary union | Eurozone |
| Euro | 6.55957 | French Franc | 1999 | France | monetary union | Eurozone |
| New French Franc | 100 | French Franc | 1960 | France | inflation | "New" was a temporary designation dropped in 1963 |
| Peso ley | 100 | Peso moneda nacional | 1970 | Argentina | inflation | |
| Icelandic króna | 100 | Icelandic króna | 1981 | Iceland | hyperinflation | |
| Euro | 40.3399 | Belgian or Luxembourgian francs | 1999 | Belgium Luxembourg | monetary union | Eurozone |
| Euro | 30.126 | Slovak koruna | 2009 | Slovakia | monetary union | Eurozone |
| Peso moneda nacional | 25 | Peso moneda corriente | 1881 | Argentina | inflation | |
| Peso moneda corriente | 8 | Real | 1826 | Argentina | ||
| Euro | 1.95583 | Deutsche Mark | 1999 | Germany | monetary union | Eurozone |
| Cruzeiro (third) | 1 | Cruzado Novo | 1990 | Brazil | renaming | |
| Karbovanets (third) | 1 | Soviet ruble | 1992 | Ukraine | Independence | |
| Euro | 0.787564 | Irish pound | 1999 | Ireland | monetary union | Eurozone |
| Euro | 0.585274 | Cypriot pound | 2008 | Cyprus | monetary union | Eurozone |
| Austro-Hungarian krone | 0.5 | Austro-Hungarian gulden | 1892 | Austria-Hungary | monetary union | Moving from silver to gold standard |
| Austrian krone | 1 | Austro-Hungarian krone | 1920 | Austria | collapse | |
| Austrian schilling | 10 000 | Austrian krone | 1925 | Austria | inflation | |
| Hungarian korona | 1 | Austro-Hungarian krone | 1919 | Hungary | collapse | |
| Hungarian pengő | 12 500 | Hungarian korona | 1927 | Hungary | inflation | |
| Hungarian forint | 400 000 000 000 000 000 000 000 000 000 | Hungarian pengő | 1946 | Hungary | hyperinflation | |
| Euro | 0.4293 | Maltese lira | 2008 | Malta | monetary union | Eurozone |
| Shekel | 10 | Israeli pound | 1980 | Israel | inflation | |
| Croatian dinar | 1 | Yugoslav 1990 dinar | 1991 | Croatia | Independence | |
| Croatian kuna | 1 000 | Croatian dinar | 1994 | Croatia | ||
| Surinamese dollar | 1 000 | Surinamese guilder | 2004 | Suriname | inflation | Old coins denominated in cents were declared to be worth their face value in the new cents |
| Peso uruguayo | 1 000 | Nuevo peso | 1993 | Uruguay | inflation | |
| Nuevo peso | 1 000 | Peso moneda nacional | 1973 | Uruguay | inflation | |
| Zambian kwacha | 1 000 | (old) Kwacha | 2013 | Zambia | inflation | |
| United States dollar | 25 000 | Sucre | 2000 | Ecuador | inflation | Full dollarization for banknotes. Ecuador also issues centavo coins |
| Talonas | 1 | Soviet ruble | 1991 | Lithuania | Independence | |
| Lithuanian litas | 100 | Talonas | 1993 | Lithuania | inflation | |
| Euro | 3.4528 | Lithuanian litas | 2015 | Lithuania | monetary union | Eurozone |
| Ariary | 5 | Franc malgache | 2005 | Madagascar | From 1961, banknotes were issued denominated in both francs and ariary | |
| Nuevo peso mexicano | 1 000 | Peso mexicano | 1993 | Mexico | inflation | "nuevo" was a temporary designation dropped in 1996 |
| Chilean escudo | 1 000 | First Chilean peso | 1960 | Chile | inflation | |
| Chilean peso | 1 000 | Chilean escudo | 1975 | Chile | inflation | |
| First zaïre | 1 000 | First congolese franc | 1967 | Democratic Republic of the Congo | inflation | |
| Nouveau zaïre | 3 000 000 | First Zaïre | 1993 | Democratic Republic of the Congo | inflation | |
| Second congolese franc | 100 000 | Nouveau zaïre | 1998 | Democratic Republic of the Congo | inflation | |
| First Kwanza | 1 | Second Angolan escudo | 1975 | Angola | Independence | |
| Novo kwanza | 1 | First Kwanza | 1990 | Angola | seizure of money supply by government | Angolans could only exchange 5% of all old notes for new ones; they had to exchange the rest for government securities |
| Kwanza reajustado | 1 000 | Novo kwanza | 1995 | Angola | inflation | |
| Second Kwanza | 1 000 000 | Kwanza reajustado | 1999 | Angola | inflation | |
| Peso boliviano | 1 000 | First boliviano | 1963 | Bolivia | inflation | |
| Boliviano | 1 000 000 | Peso boliviano | 1985 | Bolivia | inflation | |
| Guinea-Bissau peso | 1 | Portuguese Guinean escudo | 1975 | Guinea-Bissau | Independence | |
| CFA franc | 65 | Guinea-Bissau peso | 1997 | Guinea-Bissau | monetary union | West African CFA franc |
| Peseta guineana | 1 | Spanish peseta | 1969 | Equatorial Guinea | Independence | |
| Ekwele | 1 | Peseta guineana | 1975 | Equatorial Guinea | ||
| CFA franc | 4 | Ekwele | 1985 | Equatorial Guinea | monetary union | Central African CFA franc |
| First Guinean franc | 1 | CFA franc | 1959 | Guinea | Independence | |
| Syli | 10 | First Guinean franc | 1971 | Guinea | ||
| Second Guinean franc | 1 | Syli | 1985 | Guinea | ||
| Franc malien | 1 | CFA franc | 1962 | Mali | Independence | |
| CFA franc | 2 | Franc malien | 1984 | Mali | monetary union | West African CFA franc |
| Ouguiya | 5 | CFA franc | 1973 | Mauritania | ||
| First nicaraguan córdoba | 12.5 | Nicaraguan peso | 1912 | Nicaragua | ||
| Second nicaraguan córdoba | 1 000 | First nicaraguan córdoba | 1988 | Nicaragua | ||
| Third nicaraguan córdoba (córdoba oro) | 5 000 000 | Second nicaraguan córdoba | 1991 | Nicaragua | ||
| First ugandan shilling | 1 | East African shilling | 1966 | Uganda | Independence | |
| Second ugandan shilling | 100 | First ugandan shilling | 1987 | Uganda | inflation | |
| First macedonian denar | 1 | Yugoslav 1990 dinar | 1992 | Republic of Macedonia | Independence | The first denar was a temporary currency, no coins were issued |
| Second macedonian denar | 100 | First macedonian denar | 1993 | Republic of Macedonia | ||
| South Korean hwan | 100 | first South Korean won | 1954 | Republic of Korea | Inflation after Korean War(1950-1953), Independence from Japan(1945) | |
| Second South Korean won | 10 | South Korean hwan | 1963 | Republic of Korea | Inflation | |
| New Belarusian ruble | 10000 | Belarusian ruble | 2016 | Belarus | Inflation | |
| Belarusian ruble | 10 | Belarusian ruble | 1994 | Belorussia | Inflation | When Soviet rubles were still in use in Belarus, Belarusian ruble denominations were implied to be ten times more than Soviet rubles. |
See also
References
- ^ "Finance Ministry and National Bank decide to slash four zeroes from ROL's tail | Ziarul Financiar". Zf.ro. 2004-01-29. Retrieved 2010-01-06.[dead link]
- ^ Pegged to the Deutsche Mark upon renomination, but subsequently subject to drift