Redenomination is a simplification of nominal value of currency by reducing digit (zero number) without reducing the real value of the currency. The main objective of this research was to examine whether the economic conditions at the time of redenomination may affect the success of currency redenomination. The methods used were regression analysis on historical data of 30 countries which are involved in redenominating their currencies, economic experiments with t-test, and survey of people’ perspective. Based on regression analysis, inflation will decrease and economic growth will rise higher after redenomination, if previously a country have experienced high economic growth as well. Based on experimental research, when inflation was high, redenomination could increase the selling price. Otherwise, when inflation was low, redenomination could decrease the selling price. Changes in selling price after redenomination was not affected significantly by differences in economic growth conditions. In different economic conditions, redenomination policy did not significantly affect the changes number of transactions and total value of transactions in the market. From the survey results, public did not believe government can control inflation after redenomination. Redenomination also will not affect consumption pattern.
Pambudi, Andika; Juanda, Bambang; and Priyarsono, D.S. Priyarsono
"PENENTU KEBERHASILAN REDENOMINASI MATA UANG: PENDEKATAN HISTORIS DAN EKSPERIMENTAL,"
Bulletin of Monetary Economics and Banking: Vol. 17:
2, Article 4.
Available at: https://bulletin.bmeb-bi.org/bmeb/vol17/iss2/4