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
Why bother? Then you would need to convert from the old system to the new system. Change all the prices, update all the banking software, take all the old currency out of circulation. A few extra zeroes never hurt anyone, it’s just not worth the effort.
Plus, if hyperinflation continues to be bad, then in a few years the same issue will just be back. 25,000 rupees isn’t an unmanageable amount when a 2,000 rupee denomination exists.
They do. Redenomination is however very much a last-ditch financial policy that doesn’t always work and definitely isn’t free. Others have named many examples of countries redenominating their currencies.
Other comments have touched on the problems involved with redenomination, so I’ll tackle the other point. “Wouldn’t it make the math easier for people?” Not really.
You see, people are already used to the state of the currency as they use it in their daily lives. Even if the numbers are tad big, most people just accept the big numbers and calculate accordingly. Some shops may drop the lower digits on the menu for the sake of brevity and style, but people usually converts the numbers into the original “big” numbers in their minds.
As far as my experience goes, this should more or less hold true if the country isn’t experiencing hyperinflation and the nominal exchange rate to the US dollar is less than around 10,000.
The AVERAGE price of eggs is 25,544.06. The actual prices are more like 25,000 or 26,000. Their smallest bank notes is 1,000, so transactions will be in multiple of 1000.
In these countries, you can just say the number in multiple of thousands. When you say 25, people will know you mean 25,000 – because it’s physically impossible to send someone 25.
It’s a thing that happens and is called redenomination. It’s an involved process that requires an exchange rate from the old currency to the new one and a way to exchange bills. It also isn’t a surefire way to fix the problem, especially if the pun try is experiencing extreme inflation.
For an example of why countries don’t do it, see [Zimbabwe](https://en.m.wikipedia.org/wiki/Zimbabwean_dollar)
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