Turning the pages back... September 2, 1996 (08/31/03)

Turning the pages back...

September 2, 1996

The hryvnia, Ukraine's new national currency, debuted on the streets of Kyiv on Monday morning, September 2, 1996, reported our Kyiv correspondent Marta Kolomayets. She noted that on the first day of the long-awaited monetary reform, many residents combed the city looking for open banks and currency exchanges to trade in their old karbovantsi for the new, multi-colored bills.

Following are excerpts from Ms. Kolomayets' report on the hryvnia's debut.

... Although pensions and wages were paid out to senior citizens and state sector employees in crisp new hryvni and shiny kopiyky (coins) on Monday morning, workers in the private sector, tourists and foreigners waited in long lines to change karbovantsi and dollars into the new currency.

There was no sense of panic on the streets, but long lines formed at the post office, where pensioners first lined up to collect their measly monthly allotment (the average pension is a little over 4 million karbovantsi, or 40 hryvni (hrv), which amounts to less than $25 per month and then lined up at another window to trade in their karbovantsi (also known as coupons) for new hryvni.

"I've been here for three hours," said Olha Paziak, 65, a retired teacher of Ukrainian language at Kyiv State University, who strolled around the post office, waiting to collect her pension. "Although the government has assured us that we won't be cheated with this monetary reform, why take a chance," she said as she waited for her husband to exchange their life's savings of 50 million karbovantsi to 500 hrv, which is less than $300.

"Oohh, they are nice," she exclaimed as her husband brought a stack of new bills for her to examine. "And they feel like real money, not just plain paper," she said.

The new currency, in effect, slashes five zeroes off the karbovanets and brings to an end an era when every Ukrainian could call himself a millionaire.

It seems that the new currency is already having a psychological effect on Ukrainian citizens. Many stood in line examining the portraits of historical leaders - Prince Volodymyr the Great and Hetman Bohdan Khmelnytsky, who appear on the 1 hrv and 5 hrv notes, respectively - and holding the bills up to the light to see the watermark and other symbols that should eliminate easy counterfeiting.

"I'd like to see Shevchenko, but my pension is too low," joked one elderly gentleman, reviewing the hryvni he received. (Ukraine's national bard Taras Shevchenko appears on the 100 hrv note, which is worth about $59.)

"I've traded in some of my hryvnia bills for kopiyky," said Ina Zhukova, a retired State Television employee, who still works to support her family. "This is by special request from my grandson, who doesn't remember coins," she said. Ukraine has not had coins in circulation since 1991. ...

The Ukrainian government, which launched a wide-reaching public relations campaign aimed at its citizens after announcing the introduction of the hryvnia, seemed to keep to its promises that prices would be frozen for one month after the new currency was introduced.

Close to 380 trillion karbovantsi (about $2 billion) are estimated to be circulating in the shadow economy, and government leaders hope that they will be traded in for hryvni within the next two weeks.

By mid-week, the situation had stabilized, and Ukrainian government leaders said they were satisfied with the progress of monetary reform.

"The exchange of the karbovanets for the hryvnia has so far produced no unexpected problems in any part of the country," said Mr. Pynzenyk, appearing on television on Monday evening, September 2. ...

According to government leaders, the hryvnia should remain stable until the end of the month. It can currently be exchanged for 100,000 karbovantsi to 1 hryvnia, and both residents of Ukraine and non-residents can exchange their karbovantsi for hryvni until September 16, the last day both currencies will circulate in Ukraine. ... The National Bank of Ukraine has set its exchange at 1.76 to the U.S. dollar, 1.18 to the DM and about 3,000 Russian rubles to the hryvnia. At the Interbank Currency Exchange, it debuted at 1.76 hrv to the dollar. ...

Source: "Stable hryvnia greets introduction of monetary reform in Ukraine," by Marta Kolomayets, Kyiv Press Bureau, The Ukrainian Weekly, Vol. LXIV, No. 36, September 8, 1996.

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