Cash in Moldovan lei (MDL)

Moldovan's "monetary vicissitudes" of the last decade is an exciting case for Europe. For eight years, the country's government has been consistently and very strictly fighting against cash circulation. But it cannot boast any particular success in this field — today, almost two-thirds of payments in the country are still made in cash.

Brief historical background

The name of the currency leu ("lion") is borrowed from Romania — this is what the national Romanian currency has been called since 1867. In turn, the Romanian name is derived from the Dutch levendalder coin with the image of a lion. It was distributed in modern Romania and Moldavia territory in the XVII century and was commonly called "lion".

The Romanian leu was the first national currency in the region; before that, foreign money was used: rubles, zloty, ducats or the same levendalder.

Borrowing the name of the currency from its neighbour when Moldova gained independence in 1991 is not surprising at all — many aspects of modern Moldova's political and economic system were initially created with an eye on Romania.

The leu replaced two currencies at once — the Soviet ruble and coupons — the temporary Moldovan monetary unit in circulation from 1991-1993.

However, it should be noted that despite regular problems in the country's economy, the Moldovan leu has avoided denominations and other radical shocks.

Moldovan Leu (MDL) exchange rate

The Moldovan Leu exchange rate is about 18.14 lei to 1 US dollar.

During its existence, the leu has depreciated against the dollar about five times. This is an excellent indicator of a country's currency in the post-Soviet space. So, the policy of intervention of the Moldovan Central Bank in the floating exchange rate of leu can be considered adequate.

Coins and banknotes

In circulation today, there are coins of 1, 5, 10, 25 and 50 bani (in 1 leu 100 bani) and 1, 2, 5 and 10 lei. However, the 1-bani coin is practically not found in circulation. It was even stopped from minting in 2017 (the minting of 5 and 10 bani coins was stopped in 2018, 25 bani — in 2020).

The 1991-2018 issue coins have a fairly standard design with the coat of arms of Moldavia on the obverse and the denomination on the reverse. On coins of 1, 2, 5 and 10 lei minted after 2018, the country's coat of arms on the obverse is reduced, and the heraldic elements of the medieval Principality of Moldavia take centre stage.

Notably, the coins are minted not in Moldavia but in Romania. The exception is the 50-bane coin, stamped in the Czech Republic.

Banknotes in circulation have denominations of 1, 5, 10, 20, 50, 100, 200, 500 and 1000 lei. The last one, interestingly enough, has not been printed since 2003.

All banknotes depict architectural monuments located on the territory of Moldova.

The general design of banknotes did not change significantly; in the new series, only security elements were added, and, in some cases, errors were corrected.

The latter is a curious and very characteristic feature of Moldovan banknotes. On banknotes, there were misprints in the captions of the images (and on 1, 10 and 50 lei, their correction took 12 years and 4-5 "reissues", and on 1000 lei, the building of the Presidential Administration was signed as "Parliament of the Republic of Moldova". The latter was caused by the relocation of authorities during the period of banknote design.

The problematic history of cash in Moldova

Since 2015, the Moldovan government has been actively campaigning to reduce the role of cash in the country. At first, the matter was limited to the stimulation of non-cash payments. For example, in 2016, a tax lottery was introduced — each payment made with a card allowed winning 1000 lei at the end of the tax period.

But from 2021, the authorities started to rely on restrictions and bans. A limit of 100 thousand lei per month and 10 thousand lei per transaction was introduced for legal entities and 100 thousand lei per transaction for individuals. And every few months, additional restrictions are introduced in specific sectors.

But the fight against cash cannot be called successful. About 60% of payments in the country are still made in cash, and the share of non-cash is growing much slower than in other post-Soviet countries — by about 4% per year.

The shadow economy, against which the bans were introduced, does not think of shrinking. On the contrary, the share of "unobserved" money turnover has been growing for the last three years. But so far, the government's announced plans consist only of additional bans, not a revision of the strategy as a whole.

There are no problems with using cash in Moldova for everyday life and tourist purposes. However, when making large purchases and transactions, it is better to clarify the current rules to avoid problems with the law.