[HN Gopher] Bringing back the Somali shilling (2017)
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Bringing back the Somali shilling (2017)
Author : lawrencechen
Score : 75 points
Date : 2024-04-04 06:01 UTC (1 days ago)
(HTM) web link (jpkoning.blogspot.com)
(TXT) w3m dump (jpkoning.blogspot.com)
| metadat wrote:
| What a fascinating article, reality is sometimes remarkably and
| amusingly counterintuitive. I would've never guessed a culture
| would accept counterfeit currency en masse.
|
| If a 1000 shilling note is only worth 4 US cents, does buying
| stuff require a small mountain of bills?
|
| Here are some costs for food in Somalia (USD):
| Loaf of Fresh White Bread (1 lb) 0.86$ Rice (white), (1 lb)
| $0.54 Eggs (regular) (12) $2.37 Local Cheese (1 lb)
| $2.19
|
| So, not exactly dirt cheap, paying in 4 cent increments.. imagine
| if you carried around only nickels, a backpack may be needed just
| to carry the cash. What if you want to buy a car, motorcycle, or
| bicycle? Where would you even store all that cash, haha.
|
| One thing I don't fully understand, TFA says a 1000 shilling note
| is worth $0.04USD (meaning, $1USD would equal 25000 shillings),
| but when I searched for the exchange rate online, everywhere says
| $1USD converts to about 575 SOS (Somalian Shillings). Can anyone
| here enlighten me about what's going on with the shillings?
|
| Edit: Thank you @roywiggins for explaining!
| https://news.ycombinator.com/item?id=39944411
| margalabargala wrote:
| Considering the cover photo for the article is a small mountain
| of bills, that appears to be the way.
| roywiggins wrote:
| At a certain point I guess you're just going by weight of
| paper.
| BitwiseFool wrote:
| And then eventually the paper itself is worth more than the
| banknote.
| coffeebeqn wrote:
| I do wonder how a somewhat valuable metal like copper
| would work here. The copper standard. Go by the weight of
| the coin times the spot price of copper. Then the govt
| can't keep printing more but I gyess they'd have to be on
| board
| lainga wrote:
| It's happened before!
|
| "A total of 1000 coins strung together were referred to as a
| chuan (Chuan ) or diao (Diao ) and were accepted by traders and
| merchants per string because counting the individual coins
| would cost too much time. Because the strings were often
| accepted without being checked for damaged coins and coins of
| inferior quality and copper alloys, these strings would
| eventually be accepted based on their nominal value rather than
| their weight; this system is comparable to that of a fiat
| currency."
|
| https://en.wikipedia.org/wiki/String_of_cash_coins_(currency...
| roywiggins wrote:
| > when I searched for the exchange rate online, everywhere says
| $1USD converts to about 575 SOS (Somalian Shillings). Can
| anyone here enlighten me about what's going on with the
| shillings?
|
| Official exchange rates and _actual_ exchange rates can diverge
| a lot[0]. Here 's the UN's estimates of exchange rates (for, I
| think, internal accounting purposes- not something to
| particularly rely on), which puts the rate at 24,300 shillings
| to the dollar.
|
| https://treasury.un.org/operationalrates/OperationalRates.ph...
|
| [0] often this means that you can easily legally sell dollars
| for the currency at the official rate (ie, at a huge markup),
| but good luck buying dollars with the currency at _the official
| rate_. Maybe you can in very small amounts, or if you are
| politically connected.
| giva wrote:
| 24300 SOS per USD is about 4,11 cent per 1000 shilling, about
| the rate cited in the article.
| AdamH12113 wrote:
| The article explains later on:
|
| > For some time now Somalia has been partially dollarized
| economy. U.S. dollar banknotes are the most popular paper
| currency, with old shillings being used in small payments and
| in the countryside. Mobile payments are extremely popular, but
| they are usually denominated in U.S. dollars, not shillings,
| and tend to be prevalent in cities where network coverage is
| best.
| Aloha wrote:
| The article is also from 2017.
| peter_d_sherman wrote:
| The blog from which this article hails -- turns out to be an
| interesting blog about all things Money:
|
| "Moneyness "money is best described as an adjective not a noun" -
| the blog of JP Koning":
|
| https://jpkoning.blogspot.com/
|
| (Disclaimer: Note that I do not necessarily agree with
| some/any/all of the political positions and/or ideologies
| espoused by this blog. That being said, it seems to be an
| interesting blog with the central topic being all things Money
| related...)
| office_drone wrote:
| I found interesting, from
| https://news.ycombinator.com/item?id=39606093 about ancient
| coinage
|
| > "There was a chronic shortage of small change in ancient
| economies, so even poor quality fakes were accepted in markets
| for lack of anything better. Authorities tended to ignore such
| forgeries"
|
| We're seeing the same thing again in this article.
| andrewla wrote:
| The Iraqi Swiss Dinar is another example of a currency surviving
| without a central bank -- in that case, even with the central
| bank directly opposed to the continued circulation of the
| currency.
| rwmj wrote:
| He has an article about that one too:
| https://jpkoning.blogspot.com/2013/05/disowned-currency-odd-...
| NeoTar wrote:
| The article appears to be from 2017; does anyone have experience
| of what has happened since? Were the new shillings actually
| issued? Are they used?
| Maxamillion96 wrote:
| Shillings aren't used anymore and the new shillings were
| destroyed in the Sudanese civil war when the warehouse they
| were in went on fire.
|
| https://www.hiiraan.com/news4/2021/Mar/182037/somali_currenc...
|
| Nowadays people pay each other using cell-phone minutes, for
| example if I buy an orange for .4 (40 cents) I will send that
| amount via a message.
| kozak wrote:
| So, printing a counterfeit banknote is basically "proof of work"
| in this case!
| hinkley wrote:
| Why would you start with the de facto denomination instead of
| with a higher one? Tired of carrying bricks of 1000 shilling
| notes? Here's a 20k shilling note so you can carry ten instead of
| a brick.
| thaumasiotes wrote:
| That's not how it works. There's no authority over the
| production of the shilling - anyone can make them, and they
| therefore trade at the cost of production.
|
| Which means that regardless of the number you print on the
| notes, if buying something took a brick of them at the old
| denomination, it will take a brick of them at the new one too.
| hinkley wrote:
| Not if the new one is guaranteed by a bank.
| SoftTalker wrote:
| Depends on how much people trust the bank.
| acchow wrote:
| Or how much they fear the bank (bank with an army)
| InfiniteRand wrote:
| It's sort of like trading with chunks of gold, the value of the
| chunk of gold is what you can purchase, but in this case it's
| specially printed paper which can be traded for a value of a
| little more than it costs to make specially printed paper
| TMWNN wrote:
| I agree that having counterfeit bills be accepted on par with
| "genuine" ones is counterintuitive. I disagree that it's not
| rational. As I implied with the quotemarks, once there is no
| central bank or central government, a "genuine" bill is merely
| one that was printed earlier than "counterfeit" ones. As
| discussed in comments, in such a scenario, bills (whether
| "genuine" or not) become commodity currency like gold coins.
|
| I seriously doubt that Somalis kept using shillings out of
| confidence that they would be worth something again; such hopes
| would have disappeared years ago. The author alludes to the real
| reason but doesn't explore it: The currency is still convenient
| for use where actual dollars, or electronic versions, are not
| available. Shades of _Fallout_ 's bottle caps.
|
| I'm not surprised that the IMF would encourage the return to a
| sovereign currency. IMF has historically been non-encouraging of
| dollarization, despite its consistent track record of a) working
| when instituted by the government (Panama, Ecuador, El Salvador),
| and b) being preferred by the people when they lack confidence in
| the official currency (Argentina, Myanmar, Somalia itself, and
| pretty much the entire rest of the non-developed world).
| Aloha wrote:
| The Somali Schilling has fascinated me for years - because it's
| living proof about how mediums of exchange work - all people have
| to do is believe that something is worth something.
|
| The something is unimportant, could be slips of paper, rocks,
| bits of shiny metal, trees, really anything - there object need
| have no intrinsic worth - it doesnt even need to be portable
| either, just that people agree X object changed hands and Y
| person owns it now.
| neilwilson wrote:
| Or they believe that something will happen if they don't have
| it.
|
| If I impose a tax on you in Simolians, and I have the power to
| enforce it by confiscating all your assets and your liberty
| then you will obtain whatever amount of Simolians I demand as
| that is almost certainly the cheaper alternative.
|
| Then the exchange value of the currency is down to what you
| have to do for me to get me to issue Simolians.
| Aloha wrote:
| This needs a [2017] in the title.
| takinola wrote:
| I'm a bit skeptical that this article tells the complete story.
| Who is printing these counterfeits? What are their incentives?
| Why not just keep printing more and inflate the currency into
| oblivion?
| resolutebat wrote:
| Because you can only counterfeit the old notes, which have
| _already_ been inflated to the oblivion: the largest note (1000
| shillings) is $0.04. Because the cost of producing a remotely
| passable counterfeit is also approximately $0.04, the currency
| is now stable-ish.
|
| If you produce a shiny new 10,000 note, nobody will recognize
| or accept it.
| neilwilson wrote:
| When the taxing authority disappears notes and coins drop to
| their commodity value which may then appreciate like classic cars
| if they become rare - as the old Reichmarks have done.
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