The hryvnia, the nationwide forex of Ukraine, was launched within the early Nineteen Nineties after the breakup of the Soviet Union. Regardless of a quickly altering funds panorama, the administration of the nation’s banknotes and cash hardly modified till 2014, when the central financial institution undertook a significant institutional upheaval.
The catalyst was the appointment of Valeria Gontareva as governor of the Nationwide Financial institution of Ukraine (NBU). She let the hryvnia (1 hryvnia = 100 kopiikas) float to fulfill the calls for of the Worldwide Financial Fund to determine a extra life like alternate price – and over the subsequent 12 months the hryvnia misplaced about 70% of its worth. in opposition to the US greenback.
At the moment, the NBU additionally made the choice to revise each its coin and banknote collection – an formidable transfer, given that the majority international locations have a tendency so as to add or take away a single banknote or denomination. at a time. The NBU has determined to scale back the variety of cuts in circulation from 16 to 12.
“In comparison with different international locations within the area, we had too many denominations. So we took a holistic have a look at what was thought-about greatest follow and aligned our new collection, ”says Oksana Galyts, deputy director of the money stream division.
The NBU consulted with worldwide friends, such because the Czech Nationwide Financial institution, which eliminated some coin denominations in 2003, in addition to Scandinavian establishments, which concern fewer denominations in comparison with the worldwide common. In most international locations there are 5 or 6 denominations in circulation: in lots of Scandinavian international locations the denominations are on common 4.
“Probably the most helpful discussions have taken place with the industrial banks. We requested them which denominations have been used essentially the most, which have been the most costly to deal with and which of them they thought could be of biggest profit to the general public, ”explains Galyts. “Ultimately, we made their determination.”
The NBU additionally performed in-depth polls of members of the general public, 90% of whom mentioned they supported the choice to take the smaller denominations off circulation.
Scale back the numbers
The lifespan of Ukrainian forex has performed a significant function in figuring out which denominations to withdraw from circulation. Low-denomination banknotes (1, 2 and 5 hryvnia) lasted on common lower than a yr in circulation earlier than needing to be withdrawn. The elements, however, have a lifespan of between 20 and 25 years. In consequence, the NBU transformed the 4 smaller banknotes into cash. This additionally included the ten hryvnia observe, which had a barely longer lifespan, starting from one to a few years.
The NBU additionally took the choice to withdraw 4 cash (the 1, 2, 5 and 25 kopiikas) from circulation. Solely the ten and 50 kopiika cash could be produced as a part of the brand new collection. The smallest coin of the previous collection, 1 kopiika, was price $ 0.00036. The NBU additionally launched rounding guidelines whereby rounding was not utilized to particular person gadgets, solely to the whole of an bill, with tax being calculated on the penny and added to the worth.
Because of the altering worth of the hryvnia over time, the NBU additionally launched a brand new excessive worth banknote – the 1000 hryvnia ($ 36.03) – alongside the prevailing banknotes of 20, 50, 100, 200 and 500 hryvnia. Larger worth notes have a for much longer lifespan, eight years or extra, as they’re much less ceaselessly utilized by members of the general public.
On September 30, 2020, the NBU introduced that banknotes and cash designed earlier than 2003 would stop to be authorized tender – though the general public can nonetheless alternate old-series currencies, which signify 1.8% of the whole variety of banknotes at present in use (round 50 million), for 3 years.
To distinguish its newest collection of cash, the brand new denominations have a distinct weight, measurement, thickness and edge therapy than these already in circulation. Nickel-plated zinc has additionally been used for the 5 and 10 hryvnia cash, giving them a definite electromagnetic sign that may support in identification.
For its new collection of banknotes, the NBU has chosen a two-ply, formaldehyde-free paper substrate, which it believes is extra environmentally pleasant. As a substitute of utilizing a polymer, which has been proven to extend the sturdiness of banknotes, the denominations used extra ceaselessly by customers have been strengthened with “flax fibers”.
The 2-layered substrate allowed the central financial institution to include state-of-the-art security measures into the design, not restricted to these particularly for paper substrates. The banknotes have been given a brand new design function: all denominations have an built-in 1.5mm magnetic wire. The 100, 200, 500 and 1000 hryvnia banknotes will even have a 4mm window thread, whereas the 1000 hryvnia banknote can have a 6mm window thread.
Together with new optical components, the central financial institution launched new artworks synonymous with Ukraine. Nevertheless, the colour and measurement of the banknotes and the portraits on the obverse have remained the identical to assist the general public determine the denominations. The NBU additionally examined the brand new security measures in a “actual atmosphere” by issuing commemorative banknotes.
Ukrainian banknotes have been printed by NBU printing presses because the Nineteen Nineties, and the swap to a distinct substrate pressured the central financial institution to resume its printing presses and stationery in time for the redesign.
“We have been already producing banknotes for different international locations, so there was by no means any dialogue about whether or not to outsource printing,” says Volodymyr Bahlai, managing director of Banknote Printing and Minting Works.
“We simply wanted to renovate the amenities we had and produce the manufacturing cycle as much as right this moment’s highest worldwide requirements.”
Lowering the variety of cuts in circulation, Bahlai says, would save the NBU greater than $ 35 million over the subsequent 20 years. In response to the NBU, the state would save 90 million hryvnia per yr by decreasing the price of producing and processing low-value cash, and one other billion hryvnia over the subsequent 20 years by changing banknotes with cash of change.
The advantages are additionally evident within the fraud knowledge. Earlier than the introduction of the brand new banknotes, the variety of counterfeits per million real banknotes was three models in 2014, in comparison with 0.2 models for 2020.
The forward-looking initiatives put in place a number of years in the past are actually bearing fruit for Ukraine.
The Central Banking Awards have been written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, William Towning and Alice Shen.