Paper Money

Belarus to drop zeroes from new series of notes

Has a possible new competitor arisen to the Swiss 1,000-franc note as the future high-value currency of choice? Probably not. A story in Bloomberg Business on Feb. 25 reports a number of changes to the money system in Belarus, including the introduction of a new 500-ruble note that will have the highest face value in eastern Europe, the equivalent of $231 at exchange rates.

The central bank of Belarus will issue its third paper money series since 1992 by dropping four zeros off the ruble and will make the 500-ruble note the highest denomination. The highest denomination currently in use is a 200,000-ruble note valued at about $9. Russia’s largest bill is the 5,000-ruble note ($65).

The new currency is a response to the nation’s many problems. Its overall rating in the World Democracy Audit, on a scale descending from 1 to 150, is 141. It ranks in the bottom tier in measures of political rights, civil liberties and press freedom. Its corruption ranking is 93 on the 150-point scale. It is also fighting inflation that broke 100 percent three years ago, and the hope is that the currency overhaul provides an economic spark.

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Bloomberg predicts the 500-ruble note stands little chance of becoming a money of choice for launderers, terrorists and tax dodgers; it is not a convertible currency, and whether it can retain its value for long is doubtful. It is ranked as the world’s fourth worst performing currency against the dollar and the euro. 

The redenominated bank notes were printed in 2008 but were stored in vaults in response to the global financial crisis. The new notes will be put into circulation starting July 1.

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