ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, January 19, 1996 TAG: 9601190042
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
DATELINE: MOSCOW
SOURCE: Associated Press
A PHONE HOT LINE and posters are just a couple of U.S. tactics used to persuade Russians to accept the new bills.
Facing panic in Russia about the new $100 bill, the U.S. government is trying to persuade Russians that the new greenbacks are as good as the old - and that the old bills are as good as new.
Washington is funding a telephone hot line in Russia, blanketing banks with posters and dispatching representatives to reassure Russians - again - that the new currency will not prompt more counterfeiting or invalidate the old dollars.
There is more U.S. cash in Russia than in any other country except the United States, and Russians have become increasingly anxious about the new bill, which is to be introduced in the next few months.
``We have a responsibility to those who put their trust in our currency,'' Howard Schloss of the Treasury Department said at a news conference Thursday in Moscow.
The Federal Reserve estimates that $15 billion to $20 billion of the $250 billion in cash circulating outside the United States is in Russia.
Every day, planes fly up to $200 million in cash to Russia to meet the huge demand from Russian banks that need dollars to change for rubles, said U.S. Ambassador Thomas Pickering.
Much of that goes into Russians' savings, and many of them fear the money will lose value when the new note appears. The Fed's campaign is designed to dispel such fears.
``All old notes ... will still be valid at full face value - forever,'' Pickering said.
His plea would hardly raise an eyebrow in the United States, where all bills printed since 1928 are accepted as valid currency.
But Russians will take a lot of convincing.
Many of them still distrust Russia's fledgling and often corrupt banks, and most Russians choose to keep their savings in the relatively stable greenback.
Russia's Central Bank estimates that 80 percent of the billions of dollars filling Russian piggy banks is in the form of $100 bills.
Even now, traders from the seediest of street operators to the most respectable of bankers scoff at bills dated before 1990, despite laws declaring them valid. And the slightest wrinkle or smallest ink stain is enough to render dollars unacceptable.
With these fears in mind, Russians are expected to pour in to exchange booths in record numbers as soon as the new bill is released. Pickering estimated that trading would increase by 300 percent to 400 percent.
The Central Bank caused a stir last month when it announced that banks would be allowed to charge up to 2 percent commission for exchanging old $100 bills for new ones, effectively devaluating many Russians' savings.
Changing old notes for rubles, however, will not cost any more - at least it's not supposed to.
Noting the difficulties in cracking down on currency dealers who defy Central Bank orders, Pickering conceded that the Russian legal system still needs ``more work.''
LENGTH: Medium: 67 lines ILLUSTRATION: PHOTO: AP. Thomas Pickering (right) explains that the newby CNBgreenbacks are just as good as the old during Thursday's press
conference in Moscow while Howard Schloss listens. color.