Over the years many economies have suffered a downturn. Many a times the result is due to rampant inflation or a hyperinflation. In such times, a country’s currency is discarded, reformed or replaced.
The top 10 failed currencies of the world are:
10 Papiermark:
The Papiermark was the currency of Germany in 1914. It rose during the outbreak of World War 1, when Germany failed to repay war reparations to the allied nations according to the Treaty of Versailles. This led to France and Belgium occupying parts of the German industrialized areas which pressured the government to pay salaries and war debt which in turn led to hyperinflation in 1923-24. Circulation of Papiermark was stopped after this with Rentenmark replacing Papiermark at the relation of 1 trillion Papiermark = 1 Rentenmark.
9 Pengo:
The Pengo was the currency of Hungary from 1927 to 1946. It was further subdivided into 100 fillers. It was initially introduced as a strong replacement to the Austrian-Hungarian Korona. The effects of World War 2 and The Great Depression put a strain on the currency and it suffered hyperinflation. The Hungarian Pengo’s highest denomination was the 1,000 note. A year later it was ten million. And by mid-1946, it was 100 million trillion. This amount of hyperinflation forced the government to remove the Pengo and introduce Forint as the new currency.
8 Chilean Escudo:
The escudo was the currency of Chile between 1960 and 1975. It was further subdivided into 100 centesimos. When Salvador Allende was elected as the president of Chile in 1970, he nationalized industries and dramatically increased social spending to promote equality of wealth. He adopted an expansive monetary policy that initially produced economic growth but later led to a rise in inflation causing widespread labor strikes and falling exports. This kind of price-fixing also led to a rise in black markets for critical commodities. The inflation rate reached 1200% by 1973 and Escudo was replaced by Peso in 1985.
7 Peruvian Sol:
The sol was the currency of Peru between 1863 and 1985. It was subdivided into 10 dineros or 100 centavos. Sol was originally introduced to attract foreign investment. Peru increased public spending in the 1980s without a plan for dealing with the resulting debt which led to inflation and slow investment. In 1985, the government replaced the Sol with the Inti at an exchange rate of thousand to one. By 1990, inflation had reached 400% and a 10 million Inti note was created to deal with hyperinflated prices. After 6 years, the Inti was replaced by a new version of the Sol with a conversion rate of one billion to one.
6 Zimbabwe Dollar:
The Zimbabwean dollar was the currency of Zimbabwe from 1980 to 2009. It underwent three redonimations with high face value paper denominations including a $100 trillion banknote. The political turmoil and hyperinflation rapidly eroded the currency and the Zimbabwe dollar became least valued currency in the world. It reached 624% in 2004 and 1,730% in 2006. A year later, inflation zoomed to 11,000% and money was denominated in increments of 100 million dollars. In 2008, the money was replaced by a new dollar that was equal to 10 billion of the old dollars.
5 Argentine Peso:
The Peso is the current currency of Argentina. It suffered turmoil from 1975-1992. A sharp recession in 1975 caused the Argentine peso to denominate to 1000 note. A year later 5000 note was issued. By 1979, there was a 10,000 Peso banknote and by 1981, the Argentine Central Bank had introduced a 1,000,000 Peso note. The country’s economy declined, further worsening the situation between 1981 and 1982 and Argentina’s GDP fell 12% which was the worst single year decline since The Great Depression.
4 Kwanza:
The Kwanza is the currency of Angola. Four different currencies using the name kwanza have circulated since 1977. It was worst hit from 1975 to 2002 when the country was plagued by civil war. In 1991, the largest note was the 50,000 kwanza denomination. By 1994, the government issued the 500,000 banknote. In 1995, the readjusted Kwanza was introduced for 1,000 Kwanzas. This currency also had a 500,000 denomination. When Angola changed its currency again in 1999, the new Kwanza was introduced, exchanging for 1,000,000 of the readjusted Kwanzas. By this time, the new currency was equal to one billion of the pre-1991 Kwanzas.
3 Yugoslav Dinar:
The Dinar was the currency of Yugoslavia from 1918 to 2003. The dinar was further subdivided into 100 paras. There were eight distinct dinars. The hyperinflation in the early 1990s caused five revaluations between 1990 and 1994. Between 1988 and 1989, the Yugoslavian Dinar’s largest denomination was 2,000,000 notes. The New Dinar replaced the Dinar in 1992 with the highest denomination being 50,000. By 1993, this was 10,000,000,000. The government simply removed six zeros which made the new dinar replace the old dinar at rate of 1 to 1,000,000. The next year, a new currency was introduced the rate of 1 to 1,000,000,000. In 1994, inflation was increasing by a rate of 100% per day.
2 Belarusian Ruble:
The Ruble is the currency of Belarus. In 1993, the largest Belorussian note denomination was the 5,000 Rubles. By the end of the decade, this had increased to 5,000,000 notes. The government replaced the new Ruble at an exchange rate of 1 to 1,000 old Rubles. Presently, the highest denomination is the 100,000 note, which is equal to 100,000,000 1993 Ruble.
1 Greek Drachma:
Drachma has been the currency of Greece during many periods. Greece went through its worst inflation in 1944. In 1942, the highest denomination was 50,000 drachmai. By 1944, the highest denomination was 100,000,000,000 drachmai. In the 1944 currency reform, 1 new drachma was exchanged for 50,000,000,000 drachmai. Another currency reform in 1953 replaced the drachma at an exchange rate of 1 new drachma = 1000 old drachmai. More info
The lessons learnt from these were that when it comes to value and stability of the currency, the more it is printed, the less is the worth.
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