Striking the Right Note

• Author: Tadeusz Galeza and James Chan
• Pages: 60-60

60 FINANCE & DEVELOPMENT | June 2018

CURRENCY NOTES

PHOTOS: ISTOCK.COM/BENEDEK, MICHAEL BURRELL, YEVGENROMANENKO, ALAMY.COM/CHRISTOPH RUEEGG, CHRONICLE

Striking the Right Note

An inside look at paper money around the world

Tadeusz Galeza and James Chan

FROM STRINGS OF SHELLS i n the Solomon Islands

to large stone disks on the Micronesia n isle of Yap

or wheels of Parmigiano-Reg giano cheese in Italy,

money has taken many forms t hroughout history.

Today, banknotes are an artistic expres sion of

national sovereignty, with many countries choosin g

to immortaliz e famous authors and activists, loca l

wildlife, and iconic nat ional landmark s. In other

words, modern paper money represents the essence,

history, beauty, and ideals to which each countr y

aspires. To see this diversity in action, we need

look no further than the 189 member countries

of the IMF that churn out 136 unique national

currencies and form four currenc y unions.

Standouts include the Malawia n kwacha, the

smallest bank note in our study at about 87 percent

the size of the US dollar bill. At t he other end of

the spectrum are the Brunei and the Singapore

dollars, the large st banknotes in circulation, each

with a total area of more tha n 150 percent of the

US dollar bill—c alling for a really deep wallet.

Banknotes across t he world are rectang ular, but

most are wider rather than they are tall. Swiss

francs, for exa mple, tend to be very slender,

while British pounds and Kenya n shillings a re

more square.

Yet despite the variations in design, the proper-

ties that dene currenc y are the same: they are a

unit of measure, a store of value, and a medium

of exchange. Paper bills, or “at” money, also

have no intrinsic value; their worth i s determined

solely throu gh supply and d emand, a nd they

are declared lega l tender by government decree.

e most important element that separates

one national currency from another is its v alue.

Central bank s decide what the largest note in

circulation should be, and its nomina l value is

determined by the number of zeros—t his indi-

cates the purchasing p ower of the note within

the country. Currently, the largest bills cha nging

hands range from 20 Ba hrain dinars to 500,00 0

Vietnamese dong. Historical ly, because of hyper-

ination, many countries printed ban knotes with

a cartoonish number of zeros: Yugoslavia issue d

a 500 billion dinar bil l in 1991, and Zimbabwe a

100 trillion dollar bill in 2 009. Today, a hundred

units of currency (for example, 100 US dollars) is

most commonly the highest avai lable banknote

in each country. But the real value (proxied here

100 trillion Zimbabwe note

Hyperinf‌lation Bills

500 billion Yugoslav note