Many people ask when the denomination of the ruble will be in Russia. However, it is by no means easy to answer. Denomination is a phenomenon in the economy in which extra zeros are removed from banknotes and price tags in stores. Unlike inflation, the currency does not depreciate. The word "denomination" is translated from Greek as "renaming". In this process, the same value banknotes are assigned lower values, which greatly simplifies monetary calculations. The article gives an approximate answer to the question of when the ruble will be denominated in Russia.
The denomination of the ruble in 1998
A striking example of the denomination of the national currency is the denomination of the ruble in 1998. The reasons why this was done were as follows:
- Very high inflation rates, the so-called hyperinflation. In this process, money quickly depreciates in value, which forces people to switch to larger denominations. In the 1990s, inflation was catastrophic.
- The 1998 financial crisis. It was the last severe crisis of the 90s, after which a gradual economic recovery began.
- The beginning of the improvement of the economic situation in the country.
The last point is important because denomination should only be done when the economy starts to recover, otherwise it could make things worse.
During the 1998 denomination, six-figure denominations were replaced with normal denominations.
Thus, the year of the ruble denomination in Russia is 1998.
Why denominate currencies
The denomination of the ruble in Russia is due to several reasons. The main goal is to curb inflation, as well as the elimination of its consequences. Normal inflation rarely necessitates a denomination, but when it is too fast, a denomination may become necessary. At the same time, the consequences of inflation can be largely leveled. To achieve such results, a competent and thoughtful approach is needed.
Another important goal is to simplify monetary transactions. In the 90s, it was necessary to pay with banknotes with a large number of zeros, and this, of course, made life difficult for 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. During hyperinflation, there is an increase in the money supply associated with an increase insize and number of banknotes. As a result, much more money is spent on issuing money. And carrying out a denomination optimizes such expenses.
Another goal is to reveal hidden cash income and the general monetary condition in rubles. When exchanging old banknotes for new ones, you will see how much ruble money a person had.
Thus, given a certain state of the economy, a monetary reform in Russia (the denomination 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 conducting a denomination, it is important to correctly inform citizens that there are no negative consequences for their personal well-being.
What do you need to do 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 a new one. There is no need to be afraid of not having time and being left with nothing. After all, a lot of time is allocated for the process of denomination. So, with the denomination of 1998, exchange offices worked until 2002.
As for bank accounts and electronic money, they will be changed automatically.
Will there be a denomination of the ruble in Russia?
Rumors about the imminent denomination of the ruble leak into the media from time to time. However, this information is not true. There are no draft laws in this regard. The country is in recessionand the authorities have so far refrained from making any radical decisions. The mass transition to electronic currency is also some kind of brake.
As for paper money, it is impossible not to note the fact that they have greatly depreciated in recent years. 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 quite a bit on it. More and more actively go to the expense of five-thousandth banknotes. But so far the situation has not yet reached a critical level, as it was in the 90s. This means that there will be no need for a special monetary reform.
The denomination of the ruble in Russia will not be carried out due to the large number of different banks. With such a number, it will be difficult for the state to track the implementation of the decree on currency denomination. The recent decline in the number of banking institutions may improve government control over them and expedite the denomination if the need arises.
Decrease in inflation to low levels in recent years may be a reason for postponing the decision on currency reform. However, no one can guarantee that prices will continue to be stable, given the great 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 denomination. Now it is about 4% per year, and oil prices are quite stable. In connection with all thisthe likelihood of a denomination in the coming years is extremely small.
Should we wait for the ruble denomination in 2019
Many are interested in the question in what year the denomination of the ruble in Russia will happen. Unfortunately, even economists do not know the answer to it. As for 2019, we can say more definitely. The probability of the ruble denomination in 2019, of course, is very small. Various factors can influence the magnitude of the risk, but so far they remain relatively stable.
- Fundamental factors. The main thing for the economy of our country now is the stability of oil and gas prices, due to high demand for raw materials in Asia and a decrease in the prospects for increasing shale production in the United States. Oil will remain in demand on world markets in the coming years, and therefore no catastrophes will obviously occur in the Russian economy. Now the price of a barrel is hovering around the $75 mark, in all likelihood, it will remain high in 2019.
- The dollar exchange rate. In recent months, it has grown markedly, which is largely due to US sanctions, but so far the situation is far from critical. The ability of the United States to impose sanctions against Russia is rather limited.
- Geopolitical situation. Here, too, everything is pretty stable. Relations with the EU are improving and trade ties with China are growing. The situation in Ukraine is no longer as acute as it was 3-4 years ago.
- Possibility of recovery of economic growth. A change in the economic course could improve the state of the Russian economy. It is likely thatsuch measures will be gradually taken by the authorities of the Russian Federation. The main step could be to move away from the focus 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 the subsequent denomination of the ruble.
When will the denomination of the ruble be in Russia?
It is really not worth waiting for the denomination of the ruble in the next 2 years. However, the opinions of experts on the longer term are no longer so certain. The main threat to the Russian economy after 2020 will be its high dependence on raw materials. Now our country is on the winning side, because it has reserves of precisely those resources that are most in demand in the world. However, the range of required resources may change in the future.
Now the main source of foreign exchange in our country is the export of oil, gas and oil products. And if everything is in order with natural gas reserves, oil resources are rapidly depleted. After 2020, the cost of 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 renewable energy and alternative transportation revolution that has begun in recent years could send oil and coal prices down to $10 a barrel. This opinion is shared by the French oil company Engie. History shows that technological revolutions can happen withhigh speed, many times exceeding previous forecasts. It is no coincidence that the world's largest oil companies are already planning to adapt to future changes. The Russians are not ready for this yet.
Declining global gas consumption poses less of a threat to Russia as global demand forecasts are more favorable here.
Decrease in dollar receipts 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 the euro. All this can cause a new jump in inflation, which means that the risk of ruble denomination will also increase.
Geopolitical risks
After the end of Donald Trump's presidency, the EU may again turn its back on Russia and rally with the United States. Such a scenario could lead to the introduction of new collective sanctions and the subsequent weakening of the ruble. Such a situation will cause a new round of inflation and increase the risk of denomination of the Russian currency.
Recovery of the Russian economy
To minimize all these risks, it is necessary now to move away from raw material dependence and reduce dependence on equipment imports. According to experts, the measures taken now 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 there will be a denomination in Russiaruble, we tried to give the most complete answer. The most important conclusion is that it is not worth waiting for the denomination of the ruble in the coming years, but it is possible in the more distant future if a radical change in the economic course is not made. As for the date of the denomination of the ruble in Russia, no one knows it now.
