Tuesday, October 27, 2015


S3A : 

The value of national currency of each country depends on a myriad of factors among them…
  • Economic situation of the country in the world
  • efficiency of the government and securing the costs
  • political, legal and judicial stability for attracting foreign investments – (SAY INVESTMENT LAW AND OTHER BASKETS OF LAWS)
  • Observing the international law and regulation and being in line with international changes, etc.
A change in the value of currency (RV) and in its volume (MONEY COUNT AND SUPPLY), which is the result of such changes, brings about many hygienic impacts. The phenomenon of “currency replacement” occurs when along with devaluation of national currency, people show a tendency to use foreign currencies($$$$$$$$$$$$) for their daily exchange. The most significant use of deleting zeroes in economy is maintaining the value of national currency.
 Removing zeroes from national currency is more a political measure from the governments rather than an expert and technical one and is considered to be part of the package of economic reforms.
Removing zeroes from national currency is a tool for governments’ support of the strength of currency policies. This measure has an important role in boosting public confidence in governments.
Removing zeroes from national currency can play a significant role in re-election of a particular party.
There are different reasons behind one country’s decision to change the national currency; among them one can mention the following:
  • Obtaining international credit
  • Regaining national identity and national confidence
  • Controlling the currency market
  • Decreasing the inflation pressures
  • Preventing currency replacement with foreign currencies
Investigations indicate that deleting zeroes from national currency can be effective only when
  • The domain of macro-economy posses stability
  • Inflation is on the decline
  • Currency rate is stable
  • Government refrains from excessive expenditure
  • There is great confidence in the society in government’s policies
If a government only suffices to remove zeroes from national currency and does not execute comprehensive and sweeping economic reforms (WHICH ABADI IS TAKING CARE OF AS WE SPEAK) , not only the policy of removing zeroes from national currency will not be effective, but also value changes of the currency are doomed to happen soon – TRUST ME, WE DON’T WANT OUR RV TO BE DOOMED…
Reasons for Removing Zeroes from the currency
  • Problems related to having large figures in the daily exchanges
  • Problems related to accounting and calculations
  • Insecurities in carrying large amount of money for daily exchanges
  • Long waits at bank lines due to the problem of counting huge amounts of money
  • Changing national currency due to large amounts of money
  • The necessity to use Iran checks with regard to the legal problems associated with it.
  • The high cost of issuing and destroying inflow bills considering the high volume of bills
  • The high rate of bill destruction due to its high volume and thus difficulty of holding them
The advantages of removing zeros from national currency
  • Reducing the volume of bills
  • Reducing the costs of issuing and destroying bills in the country
  • Having simpler trades and financial balances
  • Strengthening national currency and its value in comparison to other currencies
  • Positive psychological effects in the society
  • Increasing its efficiency
  • Easier transfer of money
  • Possibility of having more valuable coins after deleting three zeroes by the government
  • ·
When deleting zeroes from the national currency is not accompanied by providing the necessary infrastructures and in a sudden manner, it will leave very unpleasant effects on people’s power of purchase. If removing zeroes occurs when economic reforms have proved to be ineffective or when the economic stability policies are just in the mid way, no desirable results will be gained by changing the national currency.
Disadvantages and Problems of Removing Three Zeroes from the National Currency
The risks and problems of removing zeroes can be divided as follows:
  • The inflation effect resulting from rounding off the prices to higher amounts
  • Menu cost
  • Psychological effect of the decrease in salaried
  • The risk of sending the capitals abroad and the investors’ wait to see the result of the initiative
  • The return of deleted zeroes
  • Costs of re-issuing bills and minting new coins
  • Problems in determining the prices in short terms
  • People’s confusion in the short run and the society’s confusion until being adapted to the new condition
  • Devaluation of bills and appearance of inflation
  • Lack of relationship between number of zeroes and the value of national currency
  • Lack of changes in the economic process
  • Devaluation and loss of some bills and small coins in the daily exchanges between people
  • The project’s failure in case of not being supported by people
  • Decrease in exports as the result of increase in the value of national currency
The time of implementing the project of removing zeroes from national currency needs to be postponed to the time that it will have the highest amount of effectiveness in the country’s economy. If implementation of this project does not occur in the appropriate time and as part of the package for reforming financial and banking system of the country, it will lose part of its effects.

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