Russia May Phase Out Smallest Coins
Russia’s central bank is urging the government to withdraw the smallest coins from circulation because they’re nearly worthless.
Shops in affluent Moscow rarely accept one-kopeck (0.03 U.S. cents) and five-kopeck coins. They can’t be used in vending machines and shoppers often throw them away. The bank stopped minting them, but officially they are still in circulation and banks are obliged to accept them.
The bank’s deputy head, Georgy Luntovsky, said Tuesday the decision is up to Russia’s parliament.
There are seven billion one-kopeck and six billion five-kopeck coins, made of steel and bearing an effigy of St. George slaying a serpent, Moscow’s ancient coat of arms.
The coins were introduced in 1998 as part of a redenomination after a period of hyperinflation. The Soviet ruble rapidly weakened after the Soviet Union’s demise. By 1997 the currency had weakened from about 0.60 rubles versus the dollar to about 6,000 rubles.
With three zeroes gone, the new Russian ruble equalled roughly one French franc. The smallest French coin was 5 centimes, so the smallest kopecks didn’t look out of place.
The central bank and the government at the time praised the return of the kopeck as a sign of the ruble’s stability. Less than a year later, the ruble collapsed again as a result of a severe financial crisis. In a matter of months, the currency plunged to almost 30 rubles from about 6 rubles to the dollar.
While the exchange rate has remained roughly the same since, inflation has taken its toll and hardly anyone now bothers to carry small change anymore.
The Russian bank still mints 10- and 50-kopeck coins, as well as 1-, 5- and 10-ruble coins. According to Mr. Luntovsky, only the latter two are nominally worth more than they cost to produce.