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Changes in the circulation of coins and notes may increase inflation in Russia by 0.1%
Changes in the circulation of coins and notes may increase inflation in Russia by 0.1%, a banking expert said Friday. The Central Bank of Russia has proposed withdrawing one- and five-kopek coins from circulation and replacing 10-ruble notes with coins as an adjustment for the consequences of inflation. "The possible abolishment of one- and five-kopek coins, and the replacement of 10-ruble notes with coins, could cause inflation to edge up an estimated 0.1%," said Yevgeny Nadorshin, an economic analyst at the Trust investment bank. He said the replacement of notes could affect prices in certain sectors as businessmen will round up prices to reduce the inconveniently large number of coins in circulation. "Such a reform can impact prices in retail trade and transportation fares," he said. But speaking on the withdrawal of the coins, Nadorshin said the move would not fuel a price rise. "The value of money has changed since its redenomination, and I think the possible withdrawal of coins can only reflect inflation processes of the past," the expert said. Accumulated inflation has been 234% in Russia since the start of 1999. Georgy Luntovsky, the first deputy chairman of the Central Bank, said in late October that issues of 10-ruble notes were being gradually reduced. "Coins last longer than banknotes," he said. The CBR official said coins can circulate for 10-15 years, while 10 and 50 ruble notes have a lifetime of only six-seven months. Luntovsky said the real value of one- and five-kopek coins is higher than their nominal value, and that people make money by melting and selling them at their real value.
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