<p>There are some counterexamples to the premise of your question:</p>
<ul>
<li>A USD has been on the order of <a href="https://www.bloomberg.com/quote/USDJPY:CUR" rel="nofollow noreferrer">100 Japanese Yen JPY</a> for decades. By the way, 1/100 JPY used to be called &quot;sen&quot;, and 1/1000 JPY used to be called &quot;rin&quot; (source: <a href="https://en.wikipedia.org/wiki/Japanese_yen#Introduction" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Japanese_yen#Introduction</a> )</li>
</ul>
<p>Bank notes:</p>
<p><a href="https://i.sstatic.net/JERwX.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/JERwX.png" alt="enter image description here" /></a></p>
<p>Price tags:</p>
<p><a href="https://i.sstatic.net/xXdpl.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/xXdpl.jpg" alt="enter image description here" /></a></p>
<ul>
<li>A USD has been on the order of <a href="https://www.bloomberg.com/quote/USDKRW:CUR" rel="nofollow noreferrer">1000 South Korean Won</a> for some time.</li>
</ul>
<p>Bank notes:</p>
<p><a href="https://i.sstatic.net/a2A69.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/a2A69.jpg" alt="enter image description here" /></a></p>
<p>Price tags:</p>
<p><a href="https://i.sstatic.net/qe4Et.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/qe4Et.jpg" alt="enter image description here" /></a></p>
<ul>
<li>A USD is about <a href="https://www.bloomberg.com/quote/USDCOP:CUR" rel="nofollow noreferrer">3500 Colombian Pesos (COP)</a> now. Again, it's been in the thousands for decades.</li>
</ul>
<p>Bank notes (note that they write &quot;mil&quot; in small letters instead of 000):</p>
<p><a href="https://i.sstatic.net/cFo17.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/cFo17.jpg" alt="enter image description here" /></a></p>
<p>Price tags:</p>
<p><a href="https://i.sstatic.net/yAb9s.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/yAb9s.jpg" alt="enter image description here" /></a></p>
<p>Note that $ denotes the peso, not U.S. dollars.</p>
<ul>
<li>A USD is about <a href="https://www.bloomberg.com/quote/USDVND:CUR" rel="nofollow noreferrer">20,000 Vietnamese Dong (VND)</a>. Again, it's been in the thousands for decades.</li>
</ul>
<p>Bank notes:</p>
<p><a href="https://i.sstatic.net/5xq4U.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/5xq4U.png" alt="enter image description here" /></a></p>
<p>Price tags:</p>
<p><a href="https://i.sstatic.net/PEZo2.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/PEZo2.png" alt="enter image description here" /></a></p>
<p>etc. These countries are not in any kind of economic crisis. The exchange rates are reasonably stable. The large numbers don't inconvenience anyone (except for some badly designed IT systems that can't handle very large or very small numbers accurately). These countries are all doing well.</p>
<p>Conversely, let us consider two countries at the opposite end from &quot;doing well&quot;, whose currency is rapidly depreciating versus USD:</p>
<ul>
<li>A USD is somewhere around <a href="https://www.bloomberg.com/quote/USDVES:CUR" rel="nofollow noreferrer">1,000,000 Venezuelan Bolivar (VES)</a>. Venezuela did redenominate its currency from &quot;VEB&quot; to &quot;VEF&quot; to &quot;VES&quot;, over the last few years, dropping many zeroes. It did not help. The rapidly depreciating currency is one of the symptoms of their economic problems, not the cause.</li>
</ul>
<p><a href="https://i.sstatic.net/Y1lN6.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/Y1lN6.jpg" alt="enter image description here" /></a></p>
<ul>
<li>A USD is somewhere around <a href="https://www.bloomberg.com/quote/USDRUB:CUR" rel="nofollow noreferrer">100 Russian roubles (RUB)</a>. The rouble has been depreciating rapidly for years, especially after the West imposed painful sanctions to punish Russia for its aggression against Ukraine in 2014. Russia did already redenominate the rouble from &quot;RUR&quot; to &quot;RUB&quot; dropping 3 zeroes not long ago:</li>
</ul>
<p><a href="https://i.sstatic.net/kKDDG.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/kKDDG.jpg" alt="enter image description here" /></a></p>
<p>That did not help. Russia is still broke:</p>
<p><a href="https://i.sstatic.net/RCe6I.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/RCe6I.png" alt="enter image description here" /></a></p>
<p><em>Russians looking for expired food.</em></p>
<p>Desperate Russian officials can't avert another imminent sovereign default, but are looking to delay the inevitable. They discuss redenominating their rouble again, dropping 2 more zeroes, and making 1 new rouble more valuable than 1 U.S. dollar, probably some variant of the Soviet &quot;confiscatory redenomination&quot; of 1947 (see <a href="https://en.wikipedia.org/wiki/Soviet_ruble#Fifth_Soviet_ruble,_1947%E2%80%931961" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Soviet_ruble#Fifth_Soviet_ruble,_1947%E2%80%931961</a> ). This won't help. Except for stroking Russian national pride, I fail to see the benefit of having a currency unit worth more than 1 USD.</p>
<p>Zimbamwe too used to have lots of zeroes on their bank notes:
<a href="https://i.sstatic.net/BGovd.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/BGovd.png" alt="enter image description here" /></a>
but this was a symptom of their problems, not the cause.</p>
<p>Let us therefore look at some examples of currencies whose 1 unit is worth substantialy more than 1 USD.</p>
<ul>
<li>A Kuwaiti dinars (KWD) is somewhere around <a href="https://www.bloomberg.com/quote/KWDUSD:CUR" rel="nofollow noreferrer">3 to 3.5 USD </a>. This does not pose any inconvenience when a subunit of the currency is small enough. A 1/1000 fraction of KWD, worth about 1/3 of US cent, is called &quot;fil&quot;. Here is a 1/2 KWD (500 fil) bank note:</li>
</ul>
<p><a href="https://i.sstatic.net/i0yho.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/i0yho.png" alt="1/2 KWD note" /></a></p>
<p>Price tags:</p>
<p><a href="https://i.sstatic.net/RV8kd.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/RV8kd.png" alt="enter image description here" /></a></p>
<p>This bottle of water costs 0.055 dinars, i.e. 55 fils, which is about 16 U.S. cents.</p>
<ul>
<li><p>Chile widely uses an inflation-adjusted currency en.wikipedia.org/wiki/Unidad_de_Fomento - 1 unit of account is worth about 40 USD. It is not available as cash (bank notes or coins), but is primarily used to denominate real estate prices, stock prices, loans, etc.</p>
</li>
<li><p>1 Bitcoin (XBT) is worth thousands of dollars as of this writing. Conveniently, one hundred millionth of a bitcoin is called a satoshi and can be used in transactions.</p>
</li>
<li><p>Back when the U.S. dollar had a lot more purchasing power than it has today, prices commonly used &quot;mill&quot; (1/1000 USD). It's still perfectly legal (see <a href="https://en.wikipedia.org/wiki/Mill_(currency)" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Mill_(currency)</a> ) and is often seen as the &quot;9/10&quot; on U.S. gasoline prices:</p>
</li>
</ul>
<p><a href="https://i.sstatic.net/8Lsn3.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/8Lsn3.jpg" alt="enter image description here" /></a>
<a href="https://i.sstatic.net/RDmpw.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/RDmpw.jpg" alt="enter image description here" /></a></p>
<p><em>Contemporary gasoline prices.</em></p>
<p><a href="https://i.sstatic.net/lG1TQ.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/lG1TQ.png" alt="enter image description here" /></a></p>
<p><em>Antique gasoline price sign: the gas costs 10.3 cents and the tax is 1.7 cents, i.e. 17 mills.</em></p>
<ul>
<li>Also the <a href="https://www.bloomberg.com/quote/EURUSD:CUR" rel="nofollow noreferrer">Euro (EUR)</a>, the <a href="https://www.bloomberg.com/quote/GBPUSD:CUR" rel="nofollow noreferrer">British pound (GBP)</a>, and the <a href="https://www.bloomberg.com/quote/CHFUSD:CUR" rel="nofollow noreferrer">Swiss franc (CHF)</a> are all worth more than 1 USD (but usually less than 2 USD).</li>
</ul>
<p>A good (but not quite complete) list of recent redenominations can be found in Wikipedia <a href="https://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations</a> . As you see, just swapping 1,000 units of the old currency for 1 unit of the new currency changes nothing. However in the 1947 Soviet confiscatory redenomination cited above, if the state owed you 10 old roubles before, then the state now owed you only 1 new rouble. But if you owed the state 10 old roubles, then you still owed 10 new roubles to the state. This may be the kind of scheme that Russian officials are contemplating again.</p>

CC BY-SA 4.0
2020-12-12T18:57:26.130Z
Agreed. The only practical constraint is that currency units are typically divisible by a maximum amount (e.g., one cent for a dollar), so there is an effective maximum value for a currency (since all everyday items would be worth one cent if the dollar were worth “too much”, and prices were comparable to elsewhere). Meanwhile, people would not be too happy is everyday items cost one million currency units, which is why countries sometime re-denominate after a high inflation period. This puts limits on “normal” ranges for exchange rates.
Brian Romanchuk
CC BY-SA 4.0
2020-12-13T03:47:26.347Z
I lived in Italy pre-Euro. The local currency (lira ITL) was about 1,000 for 1 U.S. dollar, later close to 1,500. That did not incovenience anyone. People were just used to prices being in the thousands. Redenominations are expensive and provide little benefit. Russian officials promise a new currency whose unit will (temporarily) be worth more than 1 US dollar. https://www.vedomosti.ru/economics/articles/2020/07/09/834313-denominatsii-rublya
Dimitri Vulis
CC BY-SA 4.0
2020-12-13T07:03:26.897Z
Thank you for your answer, this is helpful.
LoneCodeRanger
CC BY-SA 4.0
2020-12-13T12:37:33.270Z
Sure, 1000 units being equivalent to a dollar is not that bad. But it would be awkward if a cup of coffee cost one billion currency units. That happens after a hyperinflation, and a common response is to switch to a new currency.
Brian Romanchuk
CC BY-SA 4.0
2020-12-13T13:47:19.287Z
Yes, "billions" would be inconvenient. But "tens of thousands" are OK. By the way, this is what Colombian banknotes look like https://medellinguru.com/wp-content/uploads/2018/02/IMG_7302-587x1024.jpg - they write "mil" in small letters instead of "000".
Dimitri Vulis
CC BY-SA 4.0
2020-12-20T18:37:58.687Z
I find this answer overseasoned with your emotion towards Russia/Russian condition. Also, however dire the situation may be, the picture of scavenging people adds nothing to your argument.
Konstantin
CC BY-SA 4.0
2020-12-20T18:58:26.413Z
Russia is worth mentioning because there's much talk of a possible 1:100 "confiscatory redenomination" coming soon. Can you please clarify the economic benefits of having a "new rouble" which will (temporarily) be "stronger" (more valuable) than 1 US dollar or 1 Euro? I don't see any. What am I missing?
Dimitri Vulis
CC BY-SA 4.0
2020-12-20T19:51:15.390Z
@DimitriVulis There is no point in another redenomination. "Imminent sovereign default" claim is very opinionated, but I don't really care, I am scared of that scenario as well. You should remove the photo of those people though. It subtracts from the exposition.
Konstantin
CC BY-SA 4.0
2020-12-20T20:42:38.140Z
We'll have to agree with disagree. Please don't tell me what to remove, [Monsieur Shamruk](https://www.tse-fr.eu/people/konstantin-shamruk). The key point of the photo is that Russia's dire economic conditions won't be alleviated by a propaganda redenomination, just as the multiple consecutive redenominations in Venezuela didn't help. Enjoy the fine snowy weather in [Olgino](https://en.wikipedia.org/wiki/Internet_Research_Agency).
Dimitri Vulis
CC BY-SA 4.0
2021-05-23T21:40:57.823Z
You wrote... "As you see, just swapping 1,000 units of the old currency for 1 unit of the new currency changes nothing."  May be you will want to rephrase that because it clearly changes something by a factor of 1000 and it takes less space to print the required symbols on paper money and electronic displays.
H2ONaCl
CC BY-SA 4.0
2020-12-12T18:07:14.543Z
2021-09-09T20:53:50.983Z
2021-09-09T20:53:50.983Z
Dimitri Vulis
<p>This is mostly done by the individual countries out of convenience. First, most countries have a main currency, say the US-Dollar, and this unit can be separated into 100 small units, ie cents. One cent is then the smallest currency unit available in the US.</p>
<p>So if a country had a currency with a value much higher than 1 US-Dollar, that would be inconvenient because prices could not be adjusted as accurately. Imagine everything have to cost an integer amount of US-Dollars.</p>
<p>Having a currency value much lower is also inconvenient because you have to keep track of all the extra zeros that don't add any additional information. This does happen as the examples Dimitri Vulis answer show. Usually prices are then marked not directly in South Korean Won but rather in units of 1000 Won again resulting in small easy to use numbers.</p>

CC BY-SA 4.0
2020-12-13T13:50:18.370Z
Thanks for your answer, I'm very curious: in Kuwait, 1 local dinar (KWD) is worth a little over 3 US dollars. Can you please clarify why this is inconvenient?
Dimitri Vulis
CC BY-SA 4.0
2020-12-13T14:33:38.820Z
@DimitriVulis This means that in Kuweit prices can only be adjusted in steps of around 3 US cents. That is unproblematic, I was arguing that there is no country whose base currrency is worth 100 US dollars because that would be inconvenient.
quarague
CC BY-SA 4.0
2020-12-13T14:45:46.907Z
Sorry, I don't understand. A fraction of KWD is 1/1000 and called a "fil". It's worth about 1/3 of U.S. cent. I still fail to see any problem. By the way, when the U.S. dollar had a lot more purchasing power than it has today, priced commonly used "mil" (1/1000 USD). It's still perfectly legal and is often seen on gasoline prices. (Example https://cdn.hswstatic.com/gif/gas-price-fraction.jpg ) Chile, on the other hand, widely uses an inflation-adjusted currency https://en.wikipedia.org/wiki/Unidad_de_Fomento - 1 unit of account is worth about 40 USD.
Dimitri Vulis
CC BY-SA 4.0
2020-12-13T16:04:11.083Z
@DimitriVulis Note that the UF in Chile is an accounting unit, it is not available as cash in bank notes or coins. Chile uses Chilean Pesos for that purpose. All I'm saying is that is more convenient to have a value of your currency so that common items are priced in small numbers without a lot of extra zeros either before or after the comma.
quarague
CC BY-SA 4.0
2020-12-13T16:15:25.150Z
OK, having worked with these, I don't think that "CLF 0.000025" is materially less convenient than "USD 1/10 of 1 cent". We'll have to agree with disagree. I edited & added some of the points we discussed to my answer, thanks!!
Dimitri Vulis
CC BY-SA 4.0
2021-05-18T07:41:24.857Z
Hi, welcome to Economics:Stack Exchange. Please consider improving the answer by adding references from reputable and scholarly sources. As many other science stacks do, we require formal proofs, statistical evidence or links to external sources for answers making claims which are not common knowledge. Unsourced material can be edited or deleted. For more details see our [help center](https://economics.stackexchange.com/help/how-to-answer) and [FAQ on community standards for answers](https://economics.meta.stackexchange.com/questions/2113/faq-on-community-standard-for-answers)
1muflon1
CC BY-SA 4.0
2020-12-13T08:05:09.100Z
2020-12-13T08:05:09.100Z
quarague
<p>I notice that for any pair of currencies, the exchange rates seem to stay around 1 (as opposed to, say, 1,000,000). This is no longer the case if one country experiences an economic crisis that results in a very high inflation, but otherwise, rates don't seem to deviate very much from 1.</p>
<p>As you may have guessed I have very little knowledge in finance, so correct me if any of my assumptions are wrong, my aim here is to learn.</p>
<p>An example I'm thinking of is the Leu in Romania. It was revalued several times, the latest in 2005, when 10,000 old Leus were converted to 1 new Leu. That made the exchange rate with euros, for instance, closer to 1, given that 1 old Leu ≈ 0.00025 Euros, then 1 new Leu ≈ 0.25 Euros.</p>
<p>Why is this? Is this something most countries do? Does this principle have a name?</p>

CC BY-SA 4.0
2020-12-12T17:44:54.640Z
I think this question better is suited for the Economics Stack Exchange. I can imagine that values closer to 1 make it easier to compare prices between countries but giving this phenomenon a name sounds like something an economist would do.
Bob Jansen
CC BY-SA 4.0
2020-12-13T04:51:04.020Z
Wikipedia has a good list: https://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations
Dimitri Vulis
CC BY-SA 4.0
2020-12-13T06:57:43.943Z
@Dimitri Vulis Thank you, this is interesting because we can see the reasons for the redenominations.
LoneCodeRanger
CC BY-SA 4.0
2020-12-13T07:01:43.510Z
And thank you all for bringing about the word "redenomaniation", I didn't know that's what the process I've described is called, and this helps with researching the topic.
LoneCodeRanger
CC BY-SA 4.0
2020-12-13T13:56:31.163Z
Thank you. As you can see from the list, in some cases (e.g. Romania 2005, Poland 1995, it's exactly the scenario @KennyLJ described - clean up after the inflation ends. But in many other cases, governments presented it as a cure for inflation, which obviously could not be effective.
Dimitri Vulis
<currency><exchange>
Is there any pressure to keep currency exchange rates around 1?
LoneCodeRanger
# Is there any pressure to keep currency exchange rates around 1?

(Asked by: username_0 on 2020-12-12)

I notice that for any pair of currencies, the exchange rates seem to stay around 1 (as opposed to, say, 1,000,000). This is no longer the case if one country experiences an economic crisis that results in a very high inflation, but otherwise, rates don't seem to deviate very much from 1.

As you may have guessed I have very little knowledge in finance, so correct me if any of my assumptions are wrong, my aim here is to learn.

An example I'm thinking of is the Leu in Romania. It was revalued several times, the latest in 2005, when 10,000 old Leus were converted to 1 new Leu. That made the exchange rate with euros, for instance, closer to 1, given that 1 old Leu ≈ 0.00025 Euros, then 1 new Leu ≈ 0.25 Euros.

Why is this? Is this something most countries do? Does this principle have a name?

**Tags:** currency, exchange

> **Comments:**
> **username_1**: I think this question better is suited for the Economics Stack Exchange. I can imagine that values closer to 1 make it easier to compare prices between countries but giving this phenomenon a name sounds like something an economist would do.  
> **username_2**: Wikipedia has a good list: https://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations  
> **username_0**: @username_2 Thank you, this is interesting because we can see the reasons for the redenominations.  
> **username_0**: And thank you all for bringing about the word "redenomaniation", I didn't know that's what the process I've described is called, and this helps with researching the topic.  
> **username_2**: Thank you. As you can see from the list, in some cases (e.g. Romania 2005, Poland 1995, it's exactly the scenario @KennyLJ described - clean up after the inflation ends. But in many other cases, governments presented it as a cure for inflation, which obviously could not be effective.  

---

## 2 answers

### Answer by username_2 on 2020-12-12. Score: 10

There are some counterexamples to the premise of your question:

* A USD has been on the order of [100 Japanese Yen JPY](https://www.bloomberg.com/quote/USDJPY:CUR) for decades. By the way, 1/100 JPY used to be called "sen", and 1/1000 JPY used to be called "rin" (source: <https://en.wikipedia.org/wiki/Japanese_yen#Introduction> )

Bank notes:

[![enter image description here](https://i.sstatic.net/JERwX.png)](https://i.sstatic.net/JERwX.png)

Price tags:

[![enter image description here](https://i.sstatic.net/xXdpl.jpg)](https://i.sstatic.net/xXdpl.jpg)

* A USD has been on the order of [1000 South Korean Won](https://www.bloomberg.com/quote/USDKRW:CUR) for some time.

Bank notes:

[![enter image description here](https://i.sstatic.net/a2A69.jpg)](https://i.sstatic.net/a2A69.jpg)

Price tags:

[![enter image description here](https://i.sstatic.net/qe4Et.jpg)](https://i.sstatic.net/qe4Et.jpg)

* A USD is about [3500 Colombian Pesos (COP)](https://www.bloomberg.com/quote/USDCOP:CUR) now. Again, it's been in the thousands for decades.

Bank notes (note that they write "mil" in small letters instead of 000):

[![enter image description here](https://i.sstatic.net/cFo17.jpg)](https://i.sstatic.net/cFo17.jpg)

Price tags:

[![enter image description here](https://i.sstatic.net/yAb9s.jpg)](https://i.sstatic.net/yAb9s.jpg)

Note that $ denotes the peso, not U.S. dollars.

* A USD is about [20,000 Vietnamese Dong (VND)](https://www.bloomberg.com/quote/USDVND:CUR). Again, it's been in the thousands for decades.

Bank notes:

[![enter image description here](https://i.sstatic.net/5xq4U.png)](https://i.sstatic.net/5xq4U.png)

Price tags:

[![enter image description here](https://i.sstatic.net/PEZo2.png)](https://i.sstatic.net/PEZo2.png)

etc. These countries are not in any kind of economic crisis. The exchange rates are reasonably stable. The large numbers don't inconvenience anyone (except for some badly designed IT systems that can't handle very large or very small numbers accurately). These countries are all doing well.

Conversely, let us consider two countries at the opposite end from "doing well", whose currency is rapidly depreciating versus USD:

* A USD is somewhere around [1,000,000 Venezuelan Bolivar (VES)](https://www.bloomberg.com/quote/USDVES:CUR). Venezuela did redenominate its currency from "VEB" to "VEF" to "VES", over the last few years, dropping many zeroes. It did not help. The rapidly depreciating currency is one of the symptoms of their economic problems, not the cause.

[![enter image description here](https://i.sstatic.net/Y1lN6.jpg)](https://i.sstatic.net/Y1lN6.jpg)

* A USD is somewhere around [100 Russian roubles (RUB)](https://www.bloomberg.com/quote/USDRUB:CUR). The rouble has been depreciating rapidly for years, especially after the West imposed painful sanctions to punish Russia for its aggression against Ukraine in 2014. Russia did already redenominate the rouble from "RUR" to "RUB" dropping 3 zeroes not long ago:

[![enter image description here](https://i.sstatic.net/kKDDG.jpg)](https://i.sstatic.net/kKDDG.jpg)

That did not help. Russia is still broke:

[![enter image description here](https://i.sstatic.net/RCe6I.png)](https://i.sstatic.net/RCe6I.png)

*Russians looking for expired food.*

Desperate Russian officials can't avert another imminent sovereign default, but are looking to delay the inevitable. They discuss redenominating their rouble again, dropping 2 more zeroes, and making 1 new rouble more valuable than 1 U.S. dollar, probably some variant of the Soviet "confiscatory redenomination" of 1947 (see <https://en.wikipedia.org/wiki/Soviet_ruble#Fifth_Soviet_ruble,_1947%E2%80%931961> ). This won't help. Except for stroking Russian national pride, I fail to see the benefit of having a currency unit worth more than 1 USD.

Zimbamwe too used to have lots of zeroes on their bank notes:
[![enter image description here](https://i.sstatic.net/BGovd.png)](https://i.sstatic.net/BGovd.png)
but this was a symptom of their problems, not the cause.

Let us therefore look at some examples of currencies whose 1 unit is worth substantialy more than 1 USD.

* A Kuwaiti dinars (KWD) is somewhere around [3 to 3.5 USD](https://www.bloomberg.com/quote/KWDUSD:CUR) . This does not pose any inconvenience when a subunit of the currency is small enough. A 1/1000 fraction of KWD, worth about 1/3 of US cent, is called "fil". Here is a 1/2 KWD (500 fil) bank note:

[![1/2 KWD note](https://i.sstatic.net/i0yho.png)](https://i.sstatic.net/i0yho.png)

Price tags:

[![enter image description here](https://i.sstatic.net/RV8kd.png)](https://i.sstatic.net/RV8kd.png)

This bottle of water costs 0.055 dinars, i.e. 55 fils, which is about 16 U.S. cents.

* Chile widely uses an inflation-adjusted currency en.wikipedia.org/wiki/Unidad\_de\_Fomento - 1 unit of account is worth about 40 USD. It is not available as cash (bank notes or coins), but is primarily used to denominate real estate prices, stock prices, loans, etc.
* 1 Bitcoin (XBT) is worth thousands of dollars as of this writing. Conveniently, one hundred millionth of a bitcoin is called a satoshi and can be used in transactions.
* Back when the U.S. dollar had a lot more purchasing power than it has today, prices commonly used "mill" (1/1000 USD). It's still perfectly legal (see <https://en.wikipedia.org/wiki/Mill_(currency)> ) and is often seen as the "9/10" on U.S. gasoline prices:

[![enter image description here](https://i.sstatic.net/8Lsn3.jpg)](https://i.sstatic.net/8Lsn3.jpg)
[![enter image description here](https://i.sstatic.net/RDmpw.jpg)](https://i.sstatic.net/RDmpw.jpg)

*Contemporary gasoline prices.*

[![enter image description here](https://i.sstatic.net/lG1TQ.png)](https://i.sstatic.net/lG1TQ.png)

*Antique gasoline price sign: the gas costs 10.3 cents and the tax is 1.7 cents, i.e. 17 mills.*

* Also the [Euro (EUR)](https://www.bloomberg.com/quote/EURUSD:CUR), the [British pound (GBP)](https://www.bloomberg.com/quote/GBPUSD:CUR), and the [Swiss franc (CHF)](https://www.bloomberg.com/quote/CHFUSD:CUR) are all worth more than 1 USD (but usually less than 2 USD).

A good (but not quite complete) list of recent redenominations can be found in Wikipedia <https://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations> . As you see, just swapping 1,000 units of the old currency for 1 unit of the new currency changes nothing. However in the 1947 Soviet confiscatory redenomination cited above, if the state owed you 10 old roubles before, then the state now owed you only 1 new rouble. But if you owed the state 10 old roubles, then you still owed 10 new roubles to the state. This may be the kind of scheme that Russian officials are contemplating again.

> **Comments:**
> **username_3**: Agreed. The only practical constraint is that currency units are typically divisible by a maximum amount (e.g., one cent for a dollar), so there is an effective maximum value for a currency (since all everyday items would be worth one cent if the dollar were worth “too much”, and prices were comparable to elsewhere). Meanwhile, people would not be too happy is everyday items cost one million currency units, which is why countries sometime re-denominate after a high inflation period. This puts limits on “normal” ranges for exchange rates.  
> **username_2**: I lived in Italy pre-Euro. The local currency (lira ITL) was about 1,000 for 1 U.S. dollar, later close to 1,500. That did not incovenience anyone. People were just used to prices being in the thousands. Redenominations are expensive and provide little benefit. Russian officials promise a new currency whose unit will (temporarily) be worth more than 1 US dollar. https://www.vedomosti.ru/economics/articles/2020/07/09/834313-denominatsii-rublya  
> **username_0**: Thank you for your answer, this is helpful.  
> **username_3**: Sure, 1000 units being equivalent to a dollar is not that bad. But it would be awkward if a cup of coffee cost one billion currency units. That happens after a hyperinflation, and a common response is to switch to a new currency.  
> **username_2**: Yes, "billions" would be inconvenient. But "tens of thousands" are OK. By the way, this is what Colombian banknotes look like https://medellinguru.com/wp-content/uploads/2018/02/IMG_7302-587x1024.jpg - they write "mil" in small letters instead of "000".  
> **username_4**: I find this answer overseasoned with your emotion towards Russia/Russian condition. Also, however dire the situation may be, the picture of scavenging people adds nothing to your argument.  
> **username_2**: Russia is worth mentioning because there's much talk of a possible 1:100 "confiscatory redenomination" coming soon. Can you please clarify the economic benefits of having a "new rouble" which will (temporarily) be "stronger" (more valuable) than 1 US dollar or 1 Euro? I don't see any. What am I missing?  
> **username_4**: @DimitriVulis There is no point in another redenomination. "Imminent sovereign default" claim is very opinionated, but I don't really care, I am scared of that scenario as well. You should remove the photo of those people though. It subtracts from the exposition.  
> **username_2**: We'll have to agree with disagree. Please don't tell me what to remove, [Monsieur Shamruk](https://www.tse-fr.eu/people/konstantin-shamruk). The key point of the photo is that Russia's dire economic conditions won't be alleviated by a propaganda redenomination, just as the multiple consecutive redenominations in Venezuela didn't help. Enjoy the fine snowy weather in [Olgino](https://en.wikipedia.org/wiki/Internet_Research_Agency).  
> **username_5**: You wrote... "As you see, just swapping 1,000 units of the old currency for 1 unit of the new currency changes nothing."  May be you will want to rephrase that because it clearly changes something by a factor of 1000 and it takes less space to print the required symbols on paper money and electronic displays.  

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### Answer by username_6 on 2020-12-13. Score: -4

This is mostly done by the individual countries out of convenience. First, most countries have a main currency, say the US-Dollar, and this unit can be separated into 100 small units, ie cents. One cent is then the smallest currency unit available in the US.

So if a country had a currency with a value much higher than 1 US-Dollar, that would be inconvenient because prices could not be adjusted as accurately. Imagine everything have to cost an integer amount of US-Dollars.

Having a currency value much lower is also inconvenient because you have to keep track of all the extra zeros that don't add any additional information. This does happen as the examples username_2 answer show. Usually prices are then marked not directly in South Korean Won but rather in units of 1000 Won again resulting in small easy to use numbers.

> **Comments:**
> **username_2**: Thanks for your answer, I'm very curious: in Kuwait, 1 local dinar (KWD) is worth a little over 3 US dollars. Can you please clarify why this is inconvenient?  
> **username_6**: @DimitriVulis This means that in Kuweit prices can only be adjusted in steps of around 3 US cents. That is unproblematic, I was arguing that there is no country whose base currrency is worth 100 US dollars because that would be inconvenient.  
> **username_2**: Sorry, I don't understand. A fraction of KWD is 1/1000 and called a "fil". It's worth about 1/3 of U.S. cent. I still fail to see any problem. By the way, when the U.S. dollar had a lot more purchasing power than it has today, priced commonly used "mil" (1/1000 USD). It's still perfectly legal and is often seen on gasoline prices. (Example https://cdn.hswstatic.com/gif/gas-price-fraction.jpg ) Chile, on the other hand, widely uses an inflation-adjusted currency https://en.wikipedia.org/wiki/Unidad_de_Fomento - 1 unit of account is worth about 40 USD.  
> **username_6**: @DimitriVulis Note that the UF in Chile is an accounting unit, it is not available as cash in bank notes or coins. Chile uses Chilean Pesos for that purpose. All I'm saying is that is more convenient to have a value of your currency so that common items are priced in small numbers without a lot of extra zeros either before or after the comma.  
> **username_2**: OK, having worked with these, I don't think that "CLF 0.000025" is materially less convenient than "USD 1/10 of 1 cent". We'll have to agree with disagree. I edited & added some of the points we discussed to my answer, thanks!!  
> **username_7**: Hi, welcome to Economics:Stack Exchange. Please consider improving the answer by adding references from reputable and scholarly sources. As many other science stacks do, we require formal proofs, statistical evidence or links to external sources for answers making claims which are not common knowledge. Unsourced material can be edited or deleted. For more details see our [help center](https://economics.stackexchange.com/help/how-to-answer) and [FAQ on community standards for answers](https://economics.meta.stackexchange.com/questions/2113/faq-on-community-standard-for-answers)  

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