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Is the Currency redenomination the same as currency decimalization?

April 26, 2017currency decimalization redenomination

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Is the Currency redenomination the same as currency decimalization?

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• No. In the management of currencies, decimalization is the process of converting from traditional denominations to a “decimal” system, usually with two units differing by a factor of 100. For example, Nigeria adopted the decimal system on 1st January 1973, changing from Pound, Shillings and Pence to Naira and Kobo. We also changed our system of weights and measures into the decimal system (i.e. from Ounce and Pounds to grams kilograms; or miles to kilometres; Inches and Feet to centimetres and Metres). More specifically, the CBN Act (Section 15) prescribes a decimal system by stating that “The unit of currency in Nigeria shall be the Naira which shall be divided into one hundred kobo”. The currency is already structured in decimal system. The policy thrust is a re-denomination. The fact that we are removing two zeroes does not make it a ‘decimalization policy’. It could have been one, two, or three zeros.