How did Romania manage to save its currency in the 2000s by just dropping the last couple of zeros? Wouldn’t other countries be able to do the same?
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Currency devaluation, or “cutting off zeros”, is just one part of it.
Take the 1985 Israeli economic stabilization plan as an example, which sought to end massive Inflation in the Shekel, the country’s currency. It involved-
*A significant cut in government expenditures and deficit.
*Reaching an agreement with the then-powerful Histadrut labor union to enact wage controls, thus decoupling rampant wage from price inflation.
*Emergency measures imposing temporary price controls over a broad range of basic products and services.
*A sharp devaluation of the Shekel, followed by a policy of a long-term fixed foreign exchange rate.
*Curbing the Bank of Israel’s ability to print money to cover government deficits.
This, alongside large efforts to privatize a lot of government-owned businesses, managed to finally stabilize the Israeli Shekel after more than a decade of rampant inflation. Cutting the zeros off was just the final cosmetic step in order to make it more manageable for the common citizen.
If you want to sum it up, most of the plan was “stop the government from printing money, and spend less money on stuff”.
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