Abstract
The study aims to investigate the psychological impact of deleting zeroes from the value of national currency. The data were collected from five countries: Israel, Argentina, Poland, Turkey and Brazil to investigate the impact of deleting zeroes. Line graphs and simple percentages were used to analyze the impact of redenomination on inflation. The results revealed almost positive impact of redenomination on economy in all cases. Negative impacts were found only in two events of the countries i.e. Argentina and Brazil in 1983 and 1996 respectively. It was concluded that the redenomination can be used to create value and to control inflation. Keywords: Currency Redenomination, Value Creation; Inflation, National Economy; Psychological Impact
Highlights
Several countries use to delete three or more than three zeroes from their national currency
It is noted that zeroes elimination from the national currency can be effective only when www.iiste.org it is attended by the government’s policies of anti-inflation and asceticism measure in the financial regularities, financial policies of the government of a country and efforts to get rid of deficits of long-term budget and dependence on revenues
The better solution to execute the programs of economic stability and to control the rising inflation is central bank’s independence from the government of a country and eliminating the problematic policies of economic
Summary
Several countries use to delete three or more than three zeroes from their national currency. 1.3 Effectiveness of cutting zeroes Investigations explain that slashing zeroes from domestic currency can only be effective when: the government of a country restricts unnecessary expenditures, the rate of currency is stable, inflation is on the decline, and the confidence in the society is high in policies of government. If a government of a country does not execute sweeping and comprehensive economic reforms and only cuts zeroes from their national currency, the policy of eliminating zeroes from the currency will be ineffective, and currency changes values are lost to happen quickly. People drop their confidence, they will begin to use currency of other countries and this will leave a massive psychological and economic pressure on the governments. Cutting zeroes from national currencies will foreclose the penetration of international currencies in the consequences and in the country’s economy
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