Currency Redenomination: A Tool for Simplification, Not Stabilization
Currency redenomination is a government decision to change the face value of a currency – most commonly by removing zeros from banknotes and coins – so that money becomes easier to use in everyday life. When a country has gone through years of high inflation, prices and salaries can end up written in extremely large figures, making cash payments, bookkeeping, and pricing confusing and inefficient. Redenomination simplifies the “fictitious size” of the currency so that the same economic value can be expressed with smaller, cleaner numbers. In principle, it is mainly a technical and psychological reset: if it is done properly, it should not magically make people richer or poorer overnight, because prices, wages, and contracts are meant to be converted consistently into the new unit. Tahir et al. (2017), emphasize that redenomination changes the denominations in circulation rather than the underlying economic forces that originally caused inflation. Descaling, on the other hand, is an informal, market-driven process where a currency loses practical relevance, and people start using larger units, foreign currencies, or alternative benchmarks instead.
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