Russia: End of a historic denomination?

[Figleaf]

One-Kopek Coin Faces the Ax
Monday, March 24, 2008, by Catrina Stewart , Staff Writer
   
The country's state-owned mint is considering abolishing the one-kopek coin in a bid to save on production costs, a senior official said.

Arkady Trachuk, the head of Goznak, the government agency that produces banknotes and coins, said in an interview with Izvestia last week that it was looking at ways to produce coins more cheaply, given the recent spike in metal prices, in response to a request from the Central Bank.

"We could make the decision to round up prices to 10 kopeks," he said, noting that there were a number of other proposals on the table, including the use of cheaper metals. "Where are kopeks [still] required here?"

Goznak will send its proposals to the Central Bank within two months, Trachuk said.

The agency has, however, been slow to adopt this measure, chiefly because of the perception that such a move would provoke. It would lead to a slight increase in prices, the official said. "For that reason, we haven't made a decision on this yet," he said.

But economists said the changes would have little practical effect.

"If they are get rid of just one kopek, it will not have a big impact. It has become so small, and inflation is on the rise," said Tatyana Orlova, an economist at ING. "Many shops have [already] rounded up their prices. ... So if they take [the single] kopek out of circulation, it should not affect prices greatly."

Analysts said the government should proceed with caution in any significant moves on the ruble, given the population's fragile confidence in the national currency.

Rumors of a potential redenomination of the ruble have been swirling in the last couple of months. Analysts say this is partially because there was a 48 percent increase in the money supply last year.

The government also printed new banknotes, including the new 5,000 ruble note, which evoked memories of the 1990s, when the Yeltsin government introduced larger-denomination notes shortly before chopping three zeroes off the ruble.

"If I were a monetary authority, I would not do anything that could be interpreted as a redenomination by the population," Orlova said. Fears of a redenomination mean "that people stop saving, and they try to spend, and the economy is already quite overheated and inflation is on the rise. The Central Bank would probably want to wait for the time when inflation has gone down a bit."

Trachuk dismissed the rumors as "nonsense," echoing President Vladimir Putin's denial last month that the government had any intention of considering redenominating the ruble.

Trachuk also said the mint plans to recall old banknotes, based on recommendations from Interpol that banknotes be removed from circulation every seven years to clamp down on forgeries.

Source: The Moscow Times

[chrisild]

Makes sense. One ruble is currently €0.027, thus roughly 3 cent. One kopek is three cent divided by 100 ... does Russia need such a coin?

By the way, in a German article I also read that Trachuk plans to issue more 10 ruble coins (so that the number of notes of that denomination can be reduced) but that the composition will be some less expensive alloy. So that could be this "use of cheaper metals" mentioned in the text above ...

Christian

[BC Numismatics]

Christian,
  India also has coins in circulation that are worth less than 1 Euro-Cent in value,yet they are still legal tender.The 1 Rupee coin is worth around 3c. in New Zealand currency.

What Russia could be doing is following in the footsteps of countries such as New Zealand,Australia,Malaysia,Papua New Guinea,& now Fiji,is doing away with the bottom denomination coins,as the spending power is far less than when the coins were first introduced.It is an economic reality.

Aidan.

[tonyclayton]

Time we got rid of the 1p and 2p here in the UK as well, and introduced a bi- or tri-metallic five pound coin for circulation - the five pound notes are so tatty as they are not issued in ATM's

[Galapagos]

Time we got rid of the 1p and 2p here in the UK as well, and introduced a bi- or tri-metallic five pound coin for circulation - the five pound notes are so tatty as they are not issued in ATM's

But the remaining coins are still too large for their worth, the 10p and £2 particularly. They'd have to be careful with the size of any circulation £5 coin. Better to make it a polymer note, such as the Australians have.

If we did do away with the bronze coins, probably it would trigger a rehash of the size, colour, metal content of the remaining coins, such as happened in New Zealand in 2006, when they introduced three revamped coin denominations within a year: 10c, 20c and 50c. Bold.

[BC Numismatics]

Fiji is changing the sizes of its coins,but unlike New Zealand,the 5c. coin is staying in circulation,whereas,the 1c. & 2c. coins will be pulled.

As for the U.K. having a plastic 5 Quid note in circulation,it already has one - Northern Bank's Millennium 5 Quid commemorative from Ulster (which I still haven't got,along with the George Best 5 Quid note (still unlisted in Pick!)).

Aidan.

[Galapagos]

It was Paul Baker who pointed me to this forum's Fiji announcement, which is what attracted me to join. I think 10 NZ cents were worth around 4 UK p last time I looked. I agree with Tony that time should be called on our 1p and 2p. You can't buy anything for less than 15p these days. You can get a small apple or a tiny stick of fudge for 15p.

Good old Ulster - I didn't know about their plastic notes. I do have an Aussie 5 dollar one - at first I thought, some mistake - this isn't plastic - until I looked a bit closer. They're very well made.