The term "denomination" is often heard in news reports or newspaper publications. Its mention is associated with the economic and political activities of the state. Not everyone knows what exactly this means. Some people have only a vague understanding of this abstruse word. Let's look at the facts: what does the word “denomination” mean?

Economic sense

Denomination is literally translated as renaming. This is the process of changing the face value of banknotes in a set ratio. At the same time, the national currency itself does not change: the country’s reserve of funds neither decreases nor increases. Only its characteristics in real terms change. This phenomenon is called "denomination". What is this in simple words?

Judging even by the semantic coloring of the concept, this is a change in denomination. This process is necessary for the state economy to increase money turnover - reform is carried out in order to stabilize the financial system and improve the situation in the country. And often the process is preceded by hyperinflation.

Let's say there was a denomination. What is this in simple words for the average resident? From the above, it is clear that this is a change in the denomination of funds, and as a result, the expression through the monetary equivalent of all material values ​​around.

Denomination can be carried out gradually over several years, when old banknotes are circulated simultaneously with new ones, and then gradually withdrawn. This is the smoothest transition for both the country and the population. The process can become so fast that not everyone has time to exchange the old for the new.

Denomination in the history of Russia

In the post-war period, the card system was abolished. Treasury notes were exchanged for new banknotes. The ratio of old banknotes to new ones was set at 10:1. The delivery time for funds withdrawn from circulation was 2 weeks. The coins were not exchanged, but their value increased 10 times, and denomination occurred.

What is this in simple words for the inhabitants of that time? This means that all bills have lost one zero. A citizen handed over a 10 ruble banknote and received 1 ruble in return. At the same time, he did not lose his savings, because at the same time the amounts of wages, social benefits, and prices of goods were recalculated.

In 1961, banknotes changed again in a ratio of 10:1, and the same events occurred as during the abolition of the card system. The coins again remained untouched. The next changes in the country occurred only 37 years later, in 1998. Then all funds were handed over to the bank and exchanged 1:1000. Citizens were given until 2003 to complete the process.

The last denomination of the ruble has taken place to date. What is this in simple words for citizens at the turn of the 21st century? Now, on the contrary, three zeros have been added to the banknote values. Everyone who donated 1 ruble received a full 1000.

Which countries besides Russia have already experienced redenomination?

In the course of the historical development of states, changes inevitably occurred in the economy. Many countries of the world, like Russia, have experienced the process of redenomination of funds. After World War II, the process affected Poland, France and Greece. A little later, changes overtook Brazil, Turkey, and Venezuela. Germany passed a trillion currency units to one in 1923, making history the largest denominations. This happened again only in 2009 in Zimbabwe.

After the collapse of the USSR, almost every country carried out monetary reforms. This year you can observe with your own eyes the process of denomination in Belarus. The country is experiencing changes for the third time after leaving the Soviet Union.

Belarusian denomination, what is it in simple words? From July 1, 2016, ten thousand Belarusian rubles will be equal to one. The smallest denomination - 100 rubles - will turn into 1 kopeck.

Conditions

Denomination cannot be carried out on the personal initiative of the government without confirmation of its necessity. Changes must be made in cases where the money supply has increased so much that it is completely inconvenient to manage.

The state is not interested in issuing a lot of money that has to be constantly renewed. This usually happens after an economic crisis, accompanied, as we have already mentioned, by hyperinflation. However, denomination should be carried out only when the situation in the country has stabilized. The estimated inflation rate for the start of the action is 12%.

Failure to comply with these conditions will lead to a deterioration in the economic situation of the state. There will be a risk of rising inflation and repeated depreciation of money. A timely process, on the contrary, contributes to the strengthening of the national currency and stability.

Negative aspects of denomination

As you can see, denomination in simple words is a decrease or increase in the denomination of money, accompanied by the withdrawal of banknotes and the issuance of new ones. But most often, it is precisely the reduction in the value of one bill that occurs, i.e., “cutting off the zeros.” The people perceive denomination as bad news. After all, it brings with it a convenient opportunity to increase market prices. Is this really true? Yes, but this feature is mainly characteristic of imported goods.

Foreign currency as a whole becomes more expensive, which means that everything measured in it increases its value in national money. For example, with denomination, the obligations of each citizen for a bank loan in foreign currency and the prices for food brought from abroad will increase.

We must not forget about the inconvenience that the population experiences when new denominations are introduced. Difficulties in exchange and storage, and the possible loss of some amount of savings have a negative impact on the lives of ordinary people.

Should we expect redenomination in Russia in 2016?

At the end of 2014, the country was gripped by an economic crisis, and the national currency began to depreciate sharply. Tracing the connection between the concepts of “crisis” and “denomination”, many started talking about this possible event.

According to experts, the expectations are in vain. Given the current state of the Russian economy, this is not the best option for trying to stabilize the situation. In addition, according to expert forecasts, inflation is expected to decline almost twice. The circulation of funds does not at all complicate their circulation, which also indicates that there is no reason to redenominate the Russian ruble.

Denomination is an inevitable and twofold process. On the one hand, in skillful hands, “cutting off zeros” will help strengthen the national currency of the state. On the other hand, it can finish off the already shaken economic situation. Having learned the term “denomination” - that in simple words it is a decrease in the denomination of money - every resident of his country can analyze the situation and assess the likelihood of this process.

What an investor should know about ruble denomination

Ruble denomination - what, where, when

In 2015-2016, there were persistent rumors in Russia about the upcoming redenomination of the ruble. However, today this topic is not yet discussed in the Russian leadership (as far as can be judged from the news). So where did these rumors come from? What is denomination, why is it needed, and are the conditions ripe in Russia for the denomination of the ruble?

The essence and tasks of the denomination

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Denomination is a multiple change in the value of the national currency with the simultaneous replacement of old-style banknotes with new ones. Moreover, the exchange itself is often accompanied by a number of additional measures of a confiscation nature. For example:

• freezing part of savings by limiting the maximum exchange amount;
• exchange only part of the banknotes while maintaining the circulation of the rest;
• requirement to confirm the legality of income in the exchange process, etc.

Let us dwell in more detail on what goals are pursued by the denomination and what are the conditions for its successful implementation. It is generally accepted that the main goals are:

• reducing the costs of producing, storing and transporting cash;
• simplification of cash payments in trade;
• increasing confidence in the national currency.

The first item on the task list is the most controversial. Even in conditions of serious inflation, a multiple increase in the cash supply can be avoided. For example, by removing small change coins and banknotes of lower denominations from circulation with parallel rounding of prices. By the way, this approach partly solves the second problem: simplifying cash payments.

Is denomination ripe in Russia?

Despite the significant increase in prices in Russia that occurred in 2014–2016, the cash money supply, according to the Central Bank of the Russian Federation, remained unchanged and amounted to 8.5 trillion rubles as of December 2016. Thus, the “printing press” was not turned on and the adaptation of the purchasing power of the population has so far occurred through the use of accumulated savings. Meanwhile, one of the arguments in favor of denomination is an excess of money supply, when small coins remain in circulation, but at the same time increasingly larger banknotes are issued.

In this situation, there is complete confusion with prices, retail trade suffers, and considerable time is spent recalculating cash receipts. Let's assume the price of the product is 53,412 rubles. At the same time, the real purchasing power of the ruble is such that the lower limit of the denomination of banknotes can be limited, for example, to 100 rubles. Technically, this is simpler than carrying out an expensive event with far from clear consequences, accompanied by rumors, speculation and, to some extent, panic among the population. It is obvious that the decision-making on denomination, although accompanied by arguments “for everyone,” is motivated by arguments for internal use.

And this is where various hidden tricks of the central bank are used, aimed at confiscating a significant part of the population’s savings. It is known that official employment statistics very poorly reflect the real picture.

For example, according to the Federal State Statistics Service (gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/wages/labour_force), as of October 2016 there were 72.5 million people in Russia. working. Where do these numbers come from? Simple calculations show that they are obtained as the difference between the working-age population and the officially registered unemployed. However, the chief economist of the Russian department of the World Bank, Christoph Ruhl, estimates the scale of the shadow economy in Russia as catastrophic: approximately 50% of GDP in 2016.

According to independent experts, the share of people employed in the shadow economy is at least 20% of the total number. Attempts to even approximately estimate the amount of money actually removed from the control of the tax system fail due to the lack of a reliable methodology for such an assessment.

The problem of control over cash flow becomes especially acute during periods of acute inflation crises, when businesses make the most of ingenious tax evasion schemes. In such a situation, the state faces a difficult choice.

On the one hand, stabilizing the financial system requires establishing order and strict control over money circulation. On the other hand, such control, which consists, among other things, in tightening fiscal policy, leads to organized opposition at all levels of the economic hierarchy. The volume of criminal cash transfers is growing, and schemes for transferring interbank payments to offshore zones are becoming more complex. As a result, the actions of the state become chaotic, inconsistent and resemble the actions of a fire brigade that cannot keep up with the spread of new fires.

This is one of the main reasons for the failure of denominations conducted in countries with developing (more correctly called unstable) economies. As a logical result, the third task of the denomination turns out to be unsolved: increasing confidence in the national currency. Thus, the main condition for the success of the denomination is the achievement of financial stability using a set of measures:

• reduction of the refinancing rate;
• liberalization of the tax system;
• reduction in government spending;
• strengthening control over the activities of banks;
• fight against corruption in regulatory authorities;
• stimulation of production.

Only such an integrated approach makes it possible to exit the inflationary spiral and begin economic growth. Without these conditions, any denomination turns into a banal crossing out of zeros, which will not slow down to grow again. But let's assume that all conditions are met, the economy is growing, and the denomination has become possible and appropriate. Alas, even in this case, unpleasant surprises await us. Their reason is fundamental and lies in the very nature of numbers.

Law No. 86-FZ “On the Central Bank of the Russian Federation (Bank of Russia)” does not provide for confiscation-type monetary reforms. However, such a ban is not feasible for purely technical reasons. Let's assume that the current electricity tariff is 5 rubles. 20 kopecks for 1 kW/h. Let us further assume that it is planned to carry out a denomination at a rate of 100:1. Arithmetically, the new electricity tariff should be set at 5.2 kopecks. for 1 kW/h. However, it is unlikely that the already planned incomes of monopolists will be cut with the formation of “holes”. Therefore, with 100% probability, the new tariff value will be rounded up to whole numbers. This means that one of the consequences of denomination will be an increase in prices and a decrease in the purchasing power of the majority of the population.

In conditions where economic growth has just begun and a significant proportion of the population is on the verge of physical survival, a number of measures will be required from the leadership to compensate for the lost income of the poor. The easiest way is to balance the budget with a deficit, but then conditions begin to be created for a new round of inflation. This means that a deep reform of the entire taxation system is required and its burden transferred to highly paid categories of the population. Let's honestly answer the question: is the Russian economy, as well as the political system, in their current state, ready for a successful denomination of the ruble? The question itself seems irrelevant.

Examples from history

Now let’s take a brief excursion into the past and remember the most famous examples, both successful and not so successful, of denominations in various countries.

Everyone has heard about the amazing scale of hyperinflation of the Zimbabwe dollar at the turn of the 20th and 21st centuries. Prices doubled daily, and banknotes had to be carried in kilograms. The paper on which money was printed was more expensive than its face value. Finally, the decision was made to denominate. On August 1, 2006, the “new” dollar replaced the “old” one at a rate of 1 to 10 billion. On August 21 of the same year, during the next denomination, the exchange ratio was 1000.

On February 2, 2009, a third denomination was carried out, this time a trillion to one. Thus, the total exchange rate was 10 septillion. Alas, even such measures turned out to be futile against the backdrop of a rapidly degraded economy, and in April 2009 a multicurrency system was officially announced in Zimbabwe. Formally, the national dollar remained as a monetary unit, but it was supplanted by the US dollar and the euro. The economy is still in a depressing state, the national currency has been virtually destroyed, but at least the problem of the cash supply has been solved.

Another example of a record denomination. After the end of World War 2, the Hungarian economy was in a state of complete ruin, but the government continuously “put out the fire with banknotes.” There were periods when daily price increases reached 400%. For some time, counted in weeks, a banknote with a face value of 10 million adopengyo - 10 to the 28th power of pengyo - was issued. Finally, on August 1, 1946, the denomination was carried out. Pengö gave way to the forint, and the exchange rate was 4*10 to the 29th power. This was a record single denomination in world history, and quite successful.

Denomination in Russia

In the USSR, the first denomination (1922-1924) was carried out in stages. Its first phase was marked by the beginning of circulation of a new type of banknotes of the RSFSR on January 1, 1922. Numerous issues of banknotes that were previously in circulation (including pre-revolutionary ones) were exchanged at a ratio of 10,000:1. However, this did not create the conditions for the strengthening of the ruble. The Council of People's Commissars discussed the transition to the gold standard with the goal of firmly pegging the ruble to gold.

This was partially done already in 1922, and the new paper chervonets was 25% backed by gold. On October 24, a decree of the Council of People's Commissars announced a second denomination, according to which the ruble of the 1923 model was equated to 100 rubles of the 1922 model. Finally, the third denomination in the spring of 1924 was marked by the release of a silver ruble and a gold chervonets, and banknotes of the 1923 model were exchanged at the rate of 50 thousand for a new ruble. The result of this protracted and painful process was a significant stabilization of the ruble, and gold chervonets became a freely convertible currency. Alas, not for long. The gradual abandonment of gold coins and the isolation of the Soviet economy made the ruble exchange rate increasingly arbitrary.

Subsequently, denominations were carried out in the USSR twice more: in 1947 and 1961. If in 1961 a classic denomination was carried out in a ratio of 10 to 1 with the recalculation of salaries, pensions and prices, then in 1947 everything was much more complicated. In a ratio of 10 to 1, only banknotes were exchanged, but deposits in Sberbank, depending on the amount, were subject to differentiated recalculation ranging from 1:1 to 2:1. Information about the details of the event was planned to be kept secret, however, these plans failed, which is why the population began to withdraw deposits and buy goods in a panic. Coins of 1,3 and 5 kopecks retained their purchasing power, which prompted some swindlers to exchange banknotes for small change, and then exchange it for banknotes of a new type.

The last denomination in Russia was carried out in 1998 against the backdrop of the consequences of price liberalization in 1992 (weakening of the ruble and the crisis of non-payments). She pursued several goals:

• strike a blow to the shadow economy;
• limit the volume of money supply and establish strict control over it;
• stop barter payments between enterprises.

The exchange was carried out at the rate of 1000 to 1. At the same time, old-style banknotes remained in circulation (they were accepted taking into account the exchange rate), which were planned to be finally withdrawn in 2002. In practice, they stopped circulation before the end of 1999. But at the same time, the main problem was not solved: in parallel with the ruble, a money surrogate (GKO) was in circulation in the economy. The increase, which was pumped up by state bonds, led to a new financial crisis on August 17, 1998. After this, within a short time, the ruble depreciated 4 times, which dealt a heavy blow to the economy and negated the positive effect of the redenomination.

Denomination is just one of the tools for improving the economy. In addition to psychological effects (restoring confidence in the national currency, facilitating cash payments), it helps to take control of the shadow sector of the economy and tighten tax discipline. At the same time, the denomination itself is meaningless without a comprehensive economic growth program that requires political will and a qualified team of reformers. It is absolutely clear that in today's Russia there are no nearly suitable conditions, and rumors about an impending denomination may be the usual result of confusion at the top.

From a citizen’s point of view, redenomination is a reduction in the number of zeros on banknotes, while simultaneously proportionally reducing the numbers on price tags and the amounts on the payroll. In simple words, everything becomes several times cheaper, depending on the exchange rate. Citizens' income, rent, loans, taxes also decrease in a similar way.

You received 500,000 a month, after the reform your salary will be, for example, 50 thousand. A loaf of bread cost 300 - its new price will be 30 “new” rubles. A synonym for the word denomination is renaming. We can consider the reform as replacing existing banknotes with others of a new type, with which you can purchase a similar amount of goods and services.

A strict definition says that redenomination is a monetary reform aimed at reducing the face value of banknotes in order to simplify payments, stabilize the currency and replace banknotes. The name of the currency usually does not change.

When and how does the state denominate currency?

The denomination is carried out after a crisis, when the national currency has depreciated hundreds or thousands of times.

The main prerequisite for the denomination is that the volume of money supply in the country becomes difficult to manage. The announcement of such a reform serves as a signal that the crisis situation has stabilized, inflation has been reduced to acceptable levels, and the economy is growing.

At different periods, almost all countries of the world underwent the denomination procedure.

Denomination in the USSR was carried out three times - after the establishment of Soviet power in 1922, restoring the economy after the Great Patriotic War in 1947, and during Khrushchev’s reforms in 1961.

After the collapse of the USSR, among the countries of the Customs Union, Kazakhstan, Armenia and Kyrgyzstan did not carry out denomination, Russia carried out once, in 1998, and denomination in Belarus was carried out three times - in 1994, 2000 and 2016.

A country	Year of reform	Coefficient	Explanation
USSR	1922	10 000:1	10 thousand old rubles were exchanged for one, new model
USSR	1947	10:1	Cash bills were exchanged 10:1, coins continued to circulate, non-cash savings of citizens and money in enterprise accounts were exchanged with different ratios, depending on the amount and ownership.
USSR	1961	10:1	10 rubles were exchanged for 1 new sample
Russia	1998	1000:1	A thousand rubles were exchanged for 1 ruble of the new model
Belarus	1994	10:1	The banknotes were not replaced, because before the reform the denomination was “mentally” multiplied by ten, and after the reform prices and salaries were brought into line with the denomination of banknotes.
Belarus	2000	1000:1	The rationale for the reform was that hyperinflation had devalued the Belarusian ruble, and there were banknotes worth 5 million rubles in circulation.
Belarus	2016	10 000:1	In 2011, inflation reached 108% and the ruble depreciated four times again. 10 thousand old rubles were exchanged for 1 new model
Georgia	1995	1 000 000:1	One million Georgian coupons were exchanged for 1 lari
Ukraine	1996	100 000:1	100 thousand coupons - karbovanets were exchanged for 1 hryvnia

When preparing and carrying out denomination reform, the state announces the coefficient by which the denomination of banknotes will be changed and the period within which it will be carried out. After the announced date, old banknotes go out of use.

A very good film “Moneychangers” should be made about the 1961 denomination, about how enterprising citizens could earn very serious money from the upcoming change of money. I recommend viewing.

Pros and cons of denomination

The state receives the main benefit from the reform:

• the costs of printing and servicing banknotes are reduced;
• calculations are simplified;
• the monetary unit is stabilized;
• inflation decreases.

The main disadvantage for the state is the potential risk that the reform will not achieve its goal if the timing is wrong. Untimely reform could give rise to inflation and depreciate the currency again. Experts advise carrying out redenomination when inflation drops to 12%.

The population usually views the reform with suspicion, expecting a decrease in purchasing power and a loss of savings. These fears often come true.

Reform in the USSR 1961

Depreciated “Stalinist style” banknotes were exchanged without restrictions for new banknotes, in a ratio of 10:1, and 50 kopeck and 1 ruble coins were also put into circulation.

But during this reform, the ruble was devalued through a decrease in the gold content. Instead of the expected equivalent of 2.22 grams, the ruble contained the equivalent of only 0.98 grams of gold. Thanks to the planned economy, prices in state stores were kept at the stated level, but in collective farm markets, where private traders traded, the price of food tripled. The costs of this reform were overcome only after a few years

Money exchange in Russia 1998

In Russia, denomination was carried out from 1998 to 1999 and, according to the conditions for the exchange of banknotes, it was the most favorable for the population.

Old-style banknotes were not exchanged in banks, but were withdrawn from circulation through trade organizations and were gradually replaced by new banknotes and coins. Old-style banknotes that had become invalid but remained in hand after January 1, 1999 could be freely exchanged for new banknotes until 2002.

Denomination in Belarus 2016

After the denomination reform in Belarus in 2016, old banknotes were in circulation until January 1, 2017, in parallel with the new ones, and were required to be accepted as payment. After January 1, 2017, old banknotes cannot be used, but can be exchanged for new ones at the National Bank. After 2022, the exchange will cease.

Risks and minimizing losses during denomination

Some of the population's problems during the reform can be attributed to the field of psychology and general sentiments. Others may be due to some technical and organizational errors by the government during the currency replacement program.

1. These are panic rumors and fears that the state will not fulfill its promises and will suddenly stop exchanging old banknotes, or there will be problems with payment, or with banks receiving cash. Alarmists begin to get rid of cash, converting it into goods or currency, raising prices and exchange rates slightly for a while.
2. In the first few days, there may be confusion and queues in stores and banks.
3. Another psychological problem is that after huge numbers, denominated price tags seem cheap and the consumer buys more than before.
4. Trading enterprises, reducing the nominal prices, round them up, and spending increases slightly, but increases.
5. When carrying out the reform, one must be prepared for the fact that due to the reconfiguration of the software, there will be disruptions in the work of banks for a day, when making payments, when paying for mobile communications, when paying via the Internet and paying with cards.
6. It is possible that not all ATMs will have time to deliver the new type of cash.
7. It will not be superfluous to check the status of the card account or deposit after the normalization of banking operations.
8. Experts agree that there is no reason to panic before the denomination, but if there is an intention to spread the risks, then you can invest in real estate or in a package of various hard currencies.
9. A car is a bad investment because it loses value quickly, and gold only makes sense for a long-term investment, lasting years or decades.

Possible changes in loan payments

If before the redenomination a loan was taken out in national currency, then after the reform there will be no changes in the direction of increasing the cost of servicing the loan. The loan body and interest are denominated, and the proportions of costs will not change.

If the loan is taken in dollars or euros, then servicing may become more expensive. Depends on the exchange rate of the denominated currency that the national bank will set after the reform.

Prospects for a new denomination in Russia

The jump in the dollar exchange rate at the end of 2014 and the sanctions against Russia introduced by a number of countries caused a wave of panic rumors and forecasts about impending hyperinflation and a new denomination of the ruble already in 2015.

Although the President of Russia has repeatedly stated that there will be no redenomination of the ruble, such a reform is not being considered or being prepared.

There are no reasons for the reform, which were mentioned at the beginning of the article - inflation in 2016 was only 5.4%, the ruble exchange rate against the dollar has stabilized, the economy is still showing small, but growth, especially in agriculture, exports are growing, gold and foreign exchange reserves are growing, and Russia's external debt is decreasing.

Therefore, for the next few years, the prospects for denomination are almost zero.

Many people ask when the ruble will be redenominated in Russia. However, it is not at all easy to answer. Denomination is a phenomenon in economics in which extra zeros are removed from banknotes and on price tags in stores. In contrast, it does not depreciate. The word "denomination" is translated from Greek as "renaming." In this process, bills of the same value are assigned lower values, which greatly simplifies monetary calculations. The article gives an approximate answer to the question of when the ruble will be redenominated in Russia.

Ruble denomination in 1998

A striking example of the redenomination of the national currency is the redenomination of the ruble in 1998. The reasons why this was done were as follows:

• Very high rates of inflation, so-called hyperinflation. In this process, money quickly depreciates, which forces people to switch to higher denomination notes. In the 90s, inflation was catastrophic.
• Financial crisis of 1998. It was the last severe crisis of the 90s, after which a gradual economic recovery began.
• The economic situation in the country begins to improve.

The last point is important because redenomination should be carried out only when the economy begins to improve, otherwise it may lead to a worsening situation.

During the 1998 redenomination, notes with six-digit values ​​were replaced with normal denominations.

Thus, the year of ruble denomination in Russia is 1998.

Why is currency denomination carried out?

The denomination of the ruble in Russia is associated with several reasons. The main goal is to curb inflation, as well as eliminate its consequences. Normal inflation rarely necessitates a redenomination, but when it is too rapid, a redenomination may be necessary. At the same time, the consequences of inflation can be largely neutralized. To achieve such results, you need a competent and thoughtful approach.

Another important goal is to simplify monetary transactions. In the 90s, payments had to be made using banknotes with a large number of zeros, and this, of course, complicated the life of both sellers and buyers. Simply put, it was completely inconvenient. Especially when it comes to buying expensive things.

The third goal is to optimize the amount of money produced. With hyperinflation, there is an increase in the money supply associated with an increase in the size and number of banknotes. As a result, significantly more funds are spent on issuing money. And carrying out a denomination optimizes such expenses.

Another goal is to identify hidden cash income and general monetary status in rubles. When exchanging old banknotes for new ones, it will be clear how much ruble money a person had.

Thus, given a certain state of the economy, carrying out monetary reform in Russia (redenomination of the ruble) is a necessary procedure.

Psychological aspect

Some people may experience tension associated with the subjective feeling of a decrease in personal income. Therefore, when carrying out a denomination, it is important to correctly inform citizens about the absence of negative consequences for their personal well-being.

What needs to be done when denominating?

If the decree on this procedure has already been signed, then you need to collect all your ruble savings and visit a special point for exchanging old currency for new. There is no need to be afraid of not having time and being left with nothing. After all, quite a lot of time is allocated for the denomination process. Thus, during the 1998 denomination, exchange offices operated until 2002.

As for bank accounts and electronic money, they will be changed automatically.

Will there be a redenomination of the ruble in Russia?

Rumors about the imminent redenomination of the ruble leak from time to time. However, this information is not true. No bills are being prepared in this regard. The country is in a state of recession, and the authorities have so far refrained from making any radical decisions. The massive transition to electronic currency is also a hindrance.

As for paper money, one cannot help but note the fact that they have depreciated greatly in recent years. Just a few years ago, a banknote with a face value of 1000 rubles could provide a fairly large number of small purchases. Now you can buy very little with it. Everyone is increasingly expending money. But the situation has not yet reached a critical level, as it was in the 90s. This means that no special monetary reform will be required.

There will be no denomination of the ruble in Russia due to the large number of different banks. With such a number, it will be difficult for the state to monitor the implementation of the decree on currency denomination. The recent decrease in the number of banking institutions may improve state control over them and speed up redenomination if the need arises.

The decline in inflation rates to low levels in recent years may be a reason to postpone the decision on currency reform. However, no one can guarantee that prices will continue to be stable, given the large dependence of the Russian economy on world prices for raw materials. If the inflation rate is above 10% per year, then the state may decide to carry out a redenomination. Now it is about 4% per year, and oil prices are quite stable. In connection with all this, the likelihood of a denomination in the coming years is extremely small.

Should we expect a redenomination of the ruble in 2019?

Many people are interested in the question of in what year the ruble will be redenominated in Russia. Unfortunately, even economists don’t know the answer. Regarding 2019, we can say more definitely. The likelihood of a ruble denomination in 2019 is, of course, very low. The magnitude of the risk can be influenced by various factors, but so far they remain relatively stable.

• Fundamental factors. The main thing for our country’s economy now is the stability of oil and gas prices, due to high demand for raw materials in Asia and declining prospects for increasing shale production in the United States. Oil will remain in demand on world markets in the coming years, and therefore no disasters will obviously occur in the Russian economy. Currently, the price of a barrel fluctuates around $75, and in all likelihood, it will remain high in 2019.
• Dollar exchange rate. It has grown noticeably in recent months, which is largely due to US sanctions, but so far the situation is far from critical. The US's ability to impose sanctions against Russia is quite limited.
• Geopolitical situation. Here, too, everything is quite stable so far. Relations with the EU are improving, trade ties with China are increasing. The situation in Ukraine is no longer as acute as it was 3-4 years ago.
• Possibility of restoring economic growth. A change in economic policy could improve the state of the Russian economy. It is likely that such measures will be gradually adopted by the Russian authorities. The main step could be to move away from focusing on the export of raw materials and increase the share of processing industries. Otherwise there will always be risks. The more stable the economy is, the lower the likelihood of hyperinflation and subsequent redenomination of the ruble.

When will the ruble be redenominated in Russia?

It’s really not worth waiting for the ruble to be redenominated in the next 2 years. However, expert opinions on the longer term are no longer so definite. The main threat to the Russian economy after 2020 will be its high dependence on raw materials. Now our country is benefiting because it has reserves of precisely those resources that are most in demand in the world. However, the range of resources in demand may change in the future.

Now the main source of foreign currency inflow to our country is the export of oil, gas and petroleum products. And if everything is in order with our natural gas reserves, then oil resources are quickly depleted. After 2020, the cost of crude oil production may increase, and its volume will begin to decline. As a result, the net profit from the export of this type of hydrocarbons will decrease.

The revolution in renewable energy sources and alternative modes of transport, which began in recent years, could bring oil and coal prices down to $10 per barrel. This is the opinion of the French oil company Engie. History shows that technological revolutions can occur at high speed, many times faster than previously predicted. It is no coincidence that the world's largest oil companies are already planning to adapt to future changes. The Russians are not yet ready for this at all.

The decline in global gas consumption poses less of a threat to Russia, as global demand forecasts are more favorable there.

Declining dollar revenues will contribute to the development of the budget deficit. The gradual depletion of reserve funds will increase the burden on the ruble and lead to a rise in the price of the dollar and euro. All this could cause a new surge in inflation, which means the risk of ruble denomination will increase.

Geopolitical risks

After the end of Donald Trump's presidency, the European Union may again turn away from Russia and rally to the United States. Such a scenario could lead to the introduction of new collective sanctions and a subsequent weakening of the ruble. Such a situation will cause a new round of inflation and increase the risk of redenomination of the Russian currency.

Recovery of the Russian economy

To minimize all these risks, it is necessary now to move away from dependence on raw materials and reduce dependence on imported equipment. According to experts, the measures currently taken are not enough to achieve such goals. Oil and gas revenues still dominate, and the share of imports of foreign products is very high. The problem of overcoming technological backwardness also remains unresolved.

Conclusion

Thus, to the question of when the ruble will be redenominated in Russia, we tried to give the most complete answer. The most important conclusion is that there is no point in expecting a redenomination of the ruble in the coming years, but it is possible in the more distant future unless a radical change in the economic course is made. As for the date of redenomination of the ruble in Russia, no one knows it now.