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. Last Updated: 07/27/2016

U.S. Counsels Calm on New $100 Bills

Russian Central Bank officials, U.S. Treasury functionaries and a new free help-line have all sought to calm the anxiety of the Russian public about the introduction of the new U.S. $100 bill. On Thursday, it was U.S. Ambassador Thomas Pickering's turn.


"If you and your Russian friends and colleagues do not want to acquire new notes, there is no reason why you have to acquire the new notes," Pickering told a packed gathering of reporters at the Radisson-Slavjanskaya hotel. "The notes that you currently have will still remain valid and will still be honored by the United States government at their full face value."


Legal tender or not, consumers are likely to have to pay to swap old notes for new ones. The Central Bank of Russia has signed a memorandum with eight major Russian banks to limit commissions on the introduction of new notes to between 1 percent to 2 percent of face value, Pickering said.


"The 2 percent commission figure is designed to take into account all of the costs that are involved in the exchange, including the transportation, the training and expertise to identify the new notes and process the old notes," he said.


Launch date for the bills has been pushed back from its initial January target but will occur sometime in the first quarter of the year, Pickering said. There would be at least two weeks notice.


More U.S. dollars circulate in Russia than in any other country except the United States, about $15 billion to $20 billion, according to Central Bank estimates. About 80 percent of that sum is in $100 bills.


The ambassador said the purpose of the new note -- featuring a larger, off-center portrait of Benjamin Franklin and a number of other design retouches -- was to stay ahead of counterfeiting, as the $100 bill was designed in 1928 and printed since then with few variations.


"No free samples," Pickering joked to journalists.


U.S. officials Thursday unveiled a host of new posters and fliers in Russian explaining the changes; similar documents have been prepared in 17 different languages. The U.S. Embassy in Moscow last week established an informational help-line: 253-1450 or 253-1440.


But despite the efforts to win over the traditional Russian disbelief of any changes in banknote circulation, be it rubles or dollars, there are good reasons to believe that the fear of devaluation will ultimately win over the Russian soul.


"The Russians have a tendency to think that if someone is introducing new banknotes, then the old ones must be inferior, and they will rush to exchange them. The banks will make a profit on that," said a Western banker in St. Petersburg, who asked not be identified by name.


Old Soviet rubles twice became almost worthless with little advance warning after currency "redesigns" in 1991 and 1993.


The new bill will be of the same size and use the same paper and ink color, with one exception, Pickering said. As an anti-counterfeiting measure, the number 100 in the lower right-hand corner is printed in an ink that changes from green to black under a certain angle of light. Also, a special security strip in the bill will glow red under ultraviolet light.


Still, Pickering rejected reports that a huge number of counterfeit dollars are circulating in Russia, saying the number of fakes is in line with the worldwide rate of 0.01 percent of bills.


"Ninety percent of all known counterfeit currency is seized by the Secret Service before it ever enters circulation," said Howard Schloss, assistant secretary of the U.S. Treasury Department.


A source in the Interior Ministry said Russian police confiscated $100,000 worth of fake $100 bills in 1995. The Russian press put the estimate of counterfeit dollars in circulation in the country at $1 million to $5 million.


Avtobank, Imperial, Inkombank, International Finance Company, Mosbiznesbank, Rossiisky Kredit, Savings Bank and Tokobank are the Russian commercial institutions that have agreed a sub-2 percent commission rate with the Central Bank. Pickering expressed the hope that other money exchanges on the street would adhere to the same charge.


MOST-Bank in Moscow has not yet announced plans to charge a commission for swapping the old $100 bill for new ones, because the exact date of the new notes' introduction is not yet known, said Anna Sidelnyokova, head of the bank's currency operations.


Tveruniversal bank has started a new type of currency accounts, tailored especially to deal with the new $100 notes. The bank opens an account with a minimum deposit of $100 at 10 percent a year with a guarantee to pay the client in new $100 bills after two months. An earlier withdrawal cancels the guarantee.


The U.S. government spent $765,000 to design the new notes, and each new bill costs 3.7 cents to produce, according to U.S. Treasury information.


After the launch of the new $100 bill this year, redesigned $50s, $20s, $10s and $5s are to follow, one each year. Pickering did not mention the fate of the $1 bill that bears George Washington's portrait.


As for the rarely issued $2 denomination, no decision had been reached. "Stay tuned," the ambassador said.