The National Currency Re-Denomination Experience in Several Countries: A Comparative Analysis

Abstract

This study covers a highly stringent subject for Romania nowadays - the re-denomination of national currency. The introduction of the "hard" Leu is the most important monetary measure within the last 50 years. The new banknotes and coins will be the last Romanian money, as starting 2012, Romania will switch to EURO. The redenomination is a technical procedure of reducing the nominal value of the cash ensigns, which was implemented already by around 50 countries as part of an economic reform. The re-denomination does not change the substance of national currency, but it is important due to its psychological impact, both nationally and internationally. We will try to present the long term and short term benefits, the reasons for choosing the timing of the re-denomination, the technical aspects, the influence on the prices and the way in which the new currency was received. Since the redenomination was most recently implemented in Romania and Turkey, we will focus on these cases.

Keywords: Re-denomination, national curency

JEL Classification: E50