Why Albanians confuse new money and old money

The “challenge of Albanians with the expression of real value of money seems to date back to as early as 1964-65, when the old money was replaced with the new lek. Determining a new course for Albanian currency has been a practice followed immediately after World War II in Albania.

In this period, with the argument of fighting inflation, monetary operations were undertaken that reduced the amount of bills in circulation by more than 5 times. Within three years, at least 3 times Albanians have faced changing the money course, taking money they owned and giving them other money, with new courses.

Ilyaz Fishta and Venam Tochi have analysed in their studies with detailed monetary operations undertaken in the first years after the liberation of Albania. After the liberation, in circulation in Albania, there were 379 million of 808 thousand and 895 Albanian francs in the form of bank notes. The regime suspected that a large amount of bills had been taken out of the country and could be used for various purposes, including to finance the collapse of power.

Operation One, Sealing the Money

In June 1945, the special ordinance on the sealing of banknotes and Czech coins of the former National Bank of Albania was to be issued. On the basis of this ordinance, the banknotes of 20 and 100 Albanian francs were sealed, as well as Czech-moneds issued by the National Bank.

The seal that was used was rectangular and contained inside it in starry Albanian and the words “The Albanian State Bank”. Of the sealing, only bank notes with cuts under 20 Albanian francs were excluded.

The printing of money would be carried out in a short time, 10 days, from June 29, to July 8, 1945. This was the length of the currency sealing for the entire country.

Under the ordinance, the currency exchange centers were included in three areas with specific deadlines.

One area included the main centers. These included circles of the centre of Durres, Berat, Elbasan, Gjirokastra, Korca, Shkodra, Tirana, and Vlora. For these districts, the exchange was predicted to be carried out from July 4th to July 8, 1946.

The border circles were another area, which included Bilish, Erseka, Vith red, Konispoli, Kukes, Libohova, Libozhdez, Lumpa, Bishop, Pogradec, Thethhi, Permet, Saranda, Pokka, Zerqan and Delvina.

A third area included Ballesh, Burrell, Fier, Grams, Himara, Kavaja, Kote, Kruje, Lezha, Lushnje, Pajcin, Shijak, Mirdija, Tepelne and Kelky.

The exchange of coins for these districts was envisioned from July 4th to 8th.

The above division gave priority to border areas for the exchange of sealed coins. These areas were predicted to start in advance and be completed in a shorter term.

This was intended to cut the route off of bankrolls from outside. At the same time, the division in areas and the creation of many bank exchange centres aimed at the move being carried out as quickly and without obstacles to technical and organisational character” is written in the economic study of Fishta and Tochi.

And in fact, the practice of sealing was not that of putting money before a seal but of exchanging them with sealed money that had a new course. The currency stamp took place in the State Bank printery and 14 other printing presses in the country that furnished the matter.

At the end of the anticipated deadline, the bank notes and Czech notes that would not appear for sealing were considered worthless and would result in out of monetary circulation.

Out of the sealing remained more than 20 or more of the currency in circulation, which included bank notes with cuts under 20 Albanian francs.

Trying to Avoid

And that would actually create hiding space. In this period, there is no lack of effort to avoid declaring the amount of money that people owned, and thus the practice of distributing money among the family and the known was followed.

Also figured was the shopping phenomenon as a means of converting money into merchandise, in many cases even preventing the most expensive (then, the cost would again be lower than the amount of tax on them).

Another practice was that of “collapse”; exchange with small-cut banknotes that were not subject to exchange.

The balance of this measure shows that 101 million and 544 million Albanian francs were not presented for the stamp, which, as a result of the non-vulsion, went out of monetary circulation. That amount was equal to 1/4 of the Czech bank notes in circulation.

Out of 384 million and 396 thousand francs in December 1944 in circulation, as a result of the sealing effect, the quantity of currency in circulation dropped to 286 million and 100 thousand Albanian francs.

A total of 73 thousand and 87 persons appeared on the exchange stations! The 15 thousand 818 were from what was considered the wealthy class, 950 were workers, 5 thousand and 26 were craftsmen, and 26 thousand and 574 were villagers.

In addition to the effects this measure would have on the crackdown on businessmen and those considered enemies of the new regime, the reduction of the amount of currency in circulation through the fixed and new-course exchange system, according to researchers, led to a direct impact on inflation reduction and partially stabilised the situation in the country's market. The same first measure would be just a preliminary measure for the second operation, which would be even more severe.

Second operation, replacing old money with new money

Almost a year from the first monetary operation, the communist regime would launch a second operation, which this time would further reduce the amount of money in circulation; reduction by more than 5 times the amount.

On July 11th 1946, the Presidium of the People's Assembly adopted the “decree on the exchange of banknotes and Czech notes issued by the former National Bank of Albania” and sealed by the Bank of Albanian State, as well as Czechs issued by the same bank. Thus, even sealed money was being removed from circulation, but this time a new bill was given in return with a new course.

Under the law, banknotes of 20 and 100 Albanian francs were removed from circulation that had been sealed, Czech coins of 20, 200, 500, 1000, 2000 and 5,000 francs labeled by the former National Bank of Albania and sealed by the Bank of Albanian State, Czech-moneds of 100, 200 and 500 francs issued by the Albanian State Bank on former National Bank forms. These coins replace the Albanian State Bank with new coins five, 20, 100 and 500 francs.

Banks and metal coins of 5, 2, 1, 0.40, 0.020 and 0.10 Albanian francs issued by the former National Bank were envisioned. Other fraction metal coins lost the legal value of the circulation, thus being declared invalid and could not be used for purchase or exchange.

By law, it was designated that the old currency exchange report with new coins would be 5 Albanian francs equivalent to 1 new franc. This report also praised other coins that were not taken out of circulation. Prices of goods, utility fees, building rents, labour wages, debits and loans, etc. They sat down with the same report.

“Deposit for reconstruction work” and “anti-informity” through the sugar trick

The amount of money allowed to exchange each family was up to 5,000 Albanian francs. The exchange was made by one member of the family for the entire family, presenting the supply of sugar for confirmation. The measure was intended to stave off the exchange presentation for purposes of evasion by more than one member of a family.

The surplus on the amount of 5,000 Albanian francs was to be deposited at the State Bank in the “Deposital for reconstruction work”

The exchange of the old currency with the new currency took place from July 15th to July 24, 1946, at the same time across the country.

Punishment of Opposers

Those who violated the ordinance or who tried to maneuver to avoid involuntarily depositing the money were confiscated and brought before the military court.

On July 17th, there would even be a death sentence in Tirana on the charge of distributing the currency for exchange among others. In the meantime, on the same day, six people would be sentenced to prison for between 2 and 30 years on charges of trying to avoid a warrant. Similar decisions were made in Shkodra, Durres, Elbasan, Korca, Vlora, and so on.

In exchange for 5 francs = 1 franc, the quantity of currency in circulation was reduced by 5 times. Indeed, with the scheme followed, the decline in circulation was even greater.

In this “operation” there were not presented in exchange for 9.5 million francs since the new exchange rate was 1.9 million. More than 11 million francs, or 3.4 million, with the new course passed as “Deposit for Reconstruction work”. This amount was what the ordinance called “trecreca” over 5,000 francs that were exchanged for each family head. In all, 26.6 million francs, or 5.3 million, remained out of circulation.

Frank's release from circulation

Still without being familiar with the new value of money they had, a year later from the second monetary operation, Albanians would again face a demand for replacing their money.

In 1947 the decree would be passed that would remove the bank notes called Frankie. The 1947 constitution also envisioned the release of a new show. Thus, the land's base unit of the coin would be designated Lek and therefore no longer used by the franc. The new exchange report, specified in 1947, would be 1 franc in 1945 ($9, 1947). Through this movement, only Lek bills would remain in circulation. Bills 10, 50, 100, 500 and 1,000 lek issued in 1947 had the same symbolic (the new range of the Albanian state and a soldier) except the figure and color.

The reform that brought about confusion “the old re-leek”

After a period of “stability” in 1964, another legal movement to be re-enlisted as the new “lek” would be undertaken again. In 1965 the new lek would be labeled, which essentially removed a zero. Because of the similarity, in appearance, Albanians would not be accustomed to changing the value of the bill and would continue to label them at the previous value - the phenomenon that still follows today.

Taken from the Economic Portal SCAN