Denomination in Belarus. What will happen after the denomination in Belarus?

In early November 2015, the President of the Republic of Belarus signed the law on the denomination of the official currency in the summer of 2016. In the history of the ruble, this denomination in Belarus has become the largest, and the news of the change of currency is one of the most notorious in recent times. What led to depreciation of the Belarusian currency and what will happen after the denomination?

What is a denomination and why is it needed ?

A denomination is an economic procedure that is carried out to change the nominal value of the national currency in order to stabilize the money turnover after hyperinflation and simplify the procedure for settlements.

What will happen after the denomination in Belarus? During the procedure, old bills are exchanged for new ones, usually of lower value (nominal), but with the same purchasing power. The denomination provides for the gradual withdrawal of the old currency from circulation. If this occurs within a few weeks, then most of the exchange is not the entire money supply, which causes additional problems associated with the subsequent inability to exchange currency and loss of cash. If a few years are spent on the procedure, when old bills run on par with new ones, and the currency can be freely exchanged for money of a new sample, then the process takes place even more slowly, but more cohesively and steadily.

In the denomination, wages, tariffs, food and services, scholarships, pensions and other social payments are recalculated. The state gets rid of excess money supply, which allows:

• Further reduce the cost of issuing new denominations of an increasing and larger denomination;
• Simplify all calculations: both daily household expenses and monthly income of the population, and calculations at the national or international level;
• To reveal the hidden income of the population, because to avoid financial losses, all savings are exchanged, and non-cash funds are transferred to cash;
• To strengthen the national currency in relation to the currency signs of foreign states.

The denomination, as a rule, is conducted after hyperinflation. In other cases, the procedure is capable of shaking the stability of the country's economy and adversely affecting the psychological state of the population. In addition, when carrying out a denomination "not according to the testimony", the purchasing power suffers.

In simple words about the denomination

What is it? Simply put, a denomination in any country in the world (including a denomination in Belarus) is a process where "a certain number of zeros" are removed from the currency, depending on the extent of the previous hyperinflation, that is, a sharp and significant depreciation of money.

What will happen to the prices and tariffs? In connection with the procedure, all prices and payments (wages, tariffs, social benefits, scholarships) are recalculated for new money unchanged.

Why do we need a denomination? The procedure makes it possible to simplify calculations, to raise the status of the national currency and, in the long term, to reduce the state's expenses for issuing banknotes of an ever-increasing denomination.

Reasons for the denomination in Belarus

The denomination in Belarus is due to hyperinflation. The country is going through devaluation of the national currency since the moment of independence. From 1992 to 2012, the monetary unit depreciated at 237.5 million (!) Times, it is almost 12 million percent per year. However, hyperinflation in Belarus is not so "stable": the greatest percentages fall on the 1990s, and in 2000 the inflation could be more than fifty percent per year. For comparison: the normal level of inflation is a value of 3-5% per year.

A rather strange situation caused the fact that every first citizen of Belarus can rightly consider himself a millionaire. One pair of quality jeans, for example, cost a little more than one million Belarusian rubles, and the average salary of a doctor was six million.

What will be the denomination in Belarus?

The denomination in 1994 made it possible to remove only one zero from the national currency in relation to the 1993 banknotes. In 2000, one thousand Belarusian rubles was exchanged for one ruble, and in 2016 the exchange ratio will amount to 1 to 10,000.

A similar situation took place only in one of the Union republics. So, in 1995 Georgia reduced the cost of the national currency by a million times, but it is far from Belarus, where the ratio of the ruble of 2016 to the money mark of 1993 was 100 million times.

What will happen after the 2016 denomination? The denomination of the ruble in Belarus in 2016 implies "a reduction in the number of zeros" on banknotes by 4. Thus, if a certain commodity was worth more than 1 000 000 rubles, now its price will be 100.

Terms of the economic procedure

The denomination of money in Belarus will be held until the end of 2021. The process was launched on July 1, 2016 and provides for the following stages:

• Until December 31, 2016, money is exchanged without restrictions, the currency of the old and new sample is in parallel circulation;
• As of 31.12.2019, exchange will be possible in banks and non-banking organizations;
• As of 31.12.2021, it will be possible to exchange old bills for new ones only in the National Bank.

Until the end of this year (2016), sellers are required to specify two prices at the same time: the cost of goods and services before and after the denomination.

What will be the new banknotes?

Each of the new banknotes will be dedicated to one of the six regions of the country and the capital. When designing the design, images of architectural monuments were used. Eight denominations of coins have also been prepared. New money, according to the President of the Republic of Belarus, "is somewhat reminiscent of the euro."

Even the National Bank in its official address indicated that the new bills are somewhat unusual ("they have some peculiarities"). Firstly, there will be a spelling mistake on the fifty-ruble denomination, and secondly, P. Prokopovich, who no longer occupies this post, will be the head of the National Bank on new banknotes. Such confusion resulted from the fact that preparations for a large-scale denomination in Belarus began in 2008, when a part of the notes was printed, but the global financial crisis prevented the implementation of the plan. Since then, the republic has managed to reform the language and change the head of the National Bank.

The exchange rate of Belarusian money in relation to other currencies

What will happen after the denomination in Belarus in relation to other currencies? Some of the online converters currently consider the course as before the denomination, others have already "rebuilt."

At the moment, one ruble costs 33 Russian rubles or 13 UAH. One dollar after the denomination in Belarus costs slightly less than two rubles, one euro a little more.