When the lowest amount of currency you could possibly buy anything with is so high, why don’t countries
“condense” the value of their currency? For example, [12 eggs in Indonesia costs 25,544.06 Rp (their local currency)](https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=11) why don’t they condense their currency so it only costs 4-5 units of currency? Wouldn’t it make the math easier for people?
In: Economics
Countries do occasionally do this, as others have said it’s called redenomination. Some countries even do it more than once, though it’s expensive and often leads to distrust in the banking system.
Often the main motivation is not just making the currency easier to use, but flushing out hidden cash reserves in the underground economy. If you announce redenomination and give people 6 months to trade old cash for new, then suddenly people with suitcases of cash stored away need to find a way to exchange it without arousing suspicion. Towards the end of the exchange period the old cash will possibly be trading at a big discount as it’s parceled out to people who can take small stacks to the bank without worry. Possibly a decent amount of the old cash will never be traded in at all, a big bonus for the government and/or central bank.
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