Denomination is the change in the value of money after the removal of old and the introduction of new means of circulation. The most common cause of such a process is inflation. Let us consider this phenomenon in more detail.
The very word "denomination" is the term that came from Latin. In translation from this language it means "renaming". The denomination changes the value of banknotes. This process has repeatedly affected the CIS countries and more developed countries. As a rule, at first the national currency is comprehended by strong inflation. As a result of this or that reason, money becomes too much, which leads to their depreciation. At some point , the inflation rate reaches a critical level . After that, the government has no choice but to decide on a monetary reform. Old banknotes are withdrawn from use. The population and various institutions rent them out. A certain amount of old money is accepted for one unit of new money . All prices, salaries and tariffs are corrected at the same time. They are now counted in new money. Actually, this process is a denomination. This is a measure that is designed to eliminate hyperinflation, to strengthen confidence in the national currency.
In simple terms, a denomination is a reduction in the number of zeros of a single unit of circulation. You can give an example of monetary reform In Turkey, held in 2005. A million old lira turned into one new. The denomination leads to a serious reduction in the amount of turnover in the state. For example, in Turkey in 2005 the lira became a million times smaller. With the reduction in the money supply, the provision of currency with gold increases. For the population it is convenient, because it is much easier to pay bills of lesser dignity. This makes accounting easier, since there is no need to operate with huge, but unjustified numbers.
It is worth remembering examples of the denomination from the history of Russia. After the collapse of the Soviet Union, the ruble sharply devalued. Salaries began to be calculated in millions. Some improvement in the economic and political situation in Russia has made it possible to fight decisive measures against inflation. The denomination of the ruble occurred in 1998. This process was prepared for six months. In the summer of 1997, a special decree was signed The future change in the nominal value of Russian money. In the same year, the Central Bank of Russia started printing new banknotes. And already at the very beginning of 1998 they appeared in circulation. The ruble, issued in 1997, corresponded to a thousand old ones. The monetary reform was carried out gently and did not affect the finances of the population. Rubles of the old model could be used in circulation until the end of 1998 and exchanged for new ones until 2002. During this reform, more than six billion banknotes were seized. Naturally, it was beneficial not only to accountants, tired of many zeros, but also to the public. Having ceased to be "millionaires", people began to rationally treat the waste of their blood.
Nowadays, there are rumors about the forthcoming new monetary reform. Many not so long ago believed that the denomination of the ruble in 2013 is quite possible. However, at the moment there are no objective reasons for such a reform. Inflation still has a lot to grow, and to remove one zero from the banknotes does not make sense.