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Redenomination - Expected Benefits & Costs
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Lower transaction costs of economic activity as people and businesses smaller volumes cash in order to undertake their daily activities.
Reduced overall risk of carrying large volumes of currency notes.
The reallocation of resources not used to count and store huge stacks of currency to other productive uses.
Reduction in the quantity of currency notes printed to support the economy, thereby possibly creating seigniorage (which is the difference between the value of the currency notes and the cost incurred to produce and distribute it) for the central bank.
Reintroduction of the culture of using coins, which are more durable than currency notes, in the economy.
Reduction in the cost often incurred when customizing standard packages which mostly require further customisation of such packages in order to widen data fields. Thus, currency redenomination will limit the extent of customisation of standard application packages
Increase in efficiency in the payment system, especially the use of ATMs.
Simplification of accounting records and the expression of monetary values.
Provision of a psychological boost to the economy as economic agents perceive the national currency as stronger.
The perception by economic agents that they are poorer (or that their money is now more valuable since they now receives less notes for the same amount of work) creates downward pressure on aggregate demand, thereby dampening inflationary pressures.
Facilitate the use of vending machines and other related technologies.
With the assistance of cash management policies and the implementation of its financial inclusion strategy, reduce the incentive to hoard currency in the future.
Redenomination Costs
Cost of printing a new family of currency notes and minting a new family of coins.
Cost of public education and sensitization about a new family of currency.
Costs of recalibrating payment equipment and accounting software and hardware.
Cost of conversion of the currency from old to new.
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Redenomination - Expected Benefits & Cost
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