During denomination, old banknotes are exchanged for new ones at an established rate, and simultaneously prices, wages, deposits, and obligations are recalculated in the same proportion. The real value of savings remains unchanged: the sum decreases, but prices decrease by the same factor.
The purpose is typically technical—to simplify calculations and accounting after a period of high inflation, when ordinary amounts became inconveniently large. A side effect is reduced costs for producing and processing cash.
Denomination is often confused with devaluation, though these are fundamentally different things. Devaluation changes the exchange rate with foreign currencies and actually depreciates savings, while denomination only changes the form of number notation. Conducting denomination itself does not make citizens poorer or richer.
Nevertheless, the measure makes sense only after inflation stabilizes: if price growth continues, zeros return, and the costs of exchange and system reconfiguration prove wasted.