Romanian MPs give green light to Leu redenomination


Bucharest, 30.06.04



Romania's lawmakers from the lower house of the parliament, the Chamber of Deputies, gave their approval on Tuesday to a draft bill that will cut four zeroes off Romanian banknotes from July 1, 2005, in a move to push to stability and decrease inflation in the country.


Romanian officials had said earlier that the planned re-denomination will also cut bookkeeping and handling costs for local banks and traders.


In a move to ease the transition, the MPs added an amendment requiring all shopkeepers to list prices both in "old" and re-denominated lei from March 2005 to end-June 2006, local news channel Realitatea TV reported.


Although the costs of the re-denomination are yet unclear, the preparations for the move will take twelve months, central bank governor Mugur Isarescu said after the cabinet gave its approval last month.


Current banknotes will remain in circulation for twelve months after the re-denomination, and new bills with denominations ranging from five to 500 will be introduced at the same time, he added.


The re-denomination will bring back into circulation the leu's subdivision, the ban, a unit that rapidly disappeared from circulation in the beginning of the 1990s amid galloping inflation.


EU hopeful Romania still has one of the highest inflation rates in southeastern Europe, at 14.1 percent in 2003, but hopes to lower it to 9.0 percent this year. The cumulative 3.0 percent inflation for the first five months of the year shows the country well on track to achieve the target.


Romania's cash in circulation stood at 63.788 trillion Romanian lei ($1.9 billion/1.57 billion euro) at end-April, but BNR saw it rising to 80 trillion lei by November.