Ukraine's post-Soviet hyperinflation and the 1996 hryvnia reform

After independence in 1991, Ukraine introduced a transitional currency, the karbovanets, intended to last only a few months while a permanent currency, the hryvnia, was prepared and printed abroad starting in 1992. Instead the karbovanets circulated for five years and became one of the clearest cases of post-Soviet hyperinflation: by the National Bank of Ukraine's own account, inflation on the karbovanets reached roughly 10,000% in 1993 alone, wiping out savings and making everyday cash transactions require enormous stacks of near-worthless notes. The central bank judged that introducing the hryvnia into that environment would have left it devalued within weeks, so it instead pegged the karbovanets to the US dollar to build a minimum of stability first. Once inflation had been brought down through tighter monetary policy in the mid-1990s, the National Bank carried out a covert currency reform between September 2 and 16, 1996, exchanging karbovanets for hryvnias at a rate of 100,000 to 1 under a presidential decree issued only days beforehand, precisely to avoid speculative flight ahead of the switch. The episode left the National Bank with a lasting institutional caution about currency credibility that shaped its policy choices for decades afterward.