Reserve Bank of Malawi set convert some banknotes into coins as it unveils K5,000 banknote
The Reserve Bank of Malawi has unveiled highest banknote of K5,000, an upgrade from the K2,000 and announced that the Central Bank would soon convert some banknotes into coins.
At a press briefing on Tuesday, RBM Governor Dr. Wilson Banda said the higher denomination banknote is set to be release into circulation on Thursday, February 24, 2022 — up from the highest at K2,000 that was released some 5 years ago on December 19, 2016.
RBM will also introduce an upgraded K2,000 banknote to make it more secure by including modern security features so that it is harder for counterfeiters to copy the note.
The Governor said there are a number of developments occurred during the five-year period that necessitated a review of the country’s that includes RBM’s response to its own Currency Management Policy that provides guidance on how to react to various economic developments.
“Among other things, the Policy guides that the highest value denomination should not account for more than 60.0% of the total value of currency in circulation.
“When that happens, the Bank can apply a number of measures one of them being introduction of a higher banknote denomination. In the present case, our highest value denomination, the K2000 banknote, has been above the 60% threshold for sometime and has hovered above 80%.”
He added that the Central Bank wants to reduce new note issue costs, which will be achieved as “buyers will need one K5,000 note to settle a K4,000 bill instead of requiring two K2,000 banknotes.
“In that case the Bank will import fewer banknotes than before thereby reducing new note costs.”
“Portability was also considered. As we all know, currency has to be easily and economically carried from one place to another i.e. it has to be high value in small quantity.
“A good example is precious metals — which has high value and can be broken into small pieces — when compared to grain/cattle, which have small value but occupy a large space and have a bigger weight.”
Another consideration taken was that the “enormous pressure on demand for the K2,000 signifies that the banknote is being used for transaction purposes instead of being a store of value as should be the case for higher denominations”.
“This, therefore, calls for a higher denomination banknote to act as a store of value.”
On the upgraded K2,000 banknote, the Governor said they have added a modern foil stripe with 3D effect and also “replaced the image of the Malawi University of Science and Technology at the back of the note with an image of Blantyre Magistrate Court”.
“The former image represented the theme of tertiary education as one of Malawi’s aspirations. The new image changes the theme to the urgent need for the country to fight corruption.
The date of issuance into circulation on Thursday, February 24, 2022 is to allow RBM to introduce the two notes to the public.
“We all know that it takes much effort to reach some of the remote areas of the country as such news takes long to reach people in those areas.
“The Bank will, nevertheless, immediately after this press conference embark on nation-wide public sensitisation campaigns through different ways (TV, radio, print media, etc) in order to inform people across the country.
“Similarly, the notice will provide time for adaptation of the banknotes to various machines that deal with cash including currency processing machines and ATM machines.”
He also said they are also aware that usually when such announcements are made, some unscrupulous people take advantage of the announcement to fool members of the public by showing them their own counterfeit notes and referring to it as the one that the RBM has introduced.
“If anyone will be found producing a counterfeit K5,000 note or indeed any other counterfeit note, they will be punished severely. I am sure you are aware that the maximum jail term for such a crime is 7 years and also attracts a maximum fine of K15 million.
“So, let us all refrain from breaking the laws of the land,” said the Governor, adding that RBM will continue to update the public on currency matters where necessary that includes converting some banknotes into coins.
At the conclusion of the ‘FDH POS Swipe & Win’ promotion on Monday, FDH Bank encouraged its clients to continue doing their business through cashless transactions.
FDH Bank said it was pleasing that its clients positively responded to the 3-moth promotion it organised that encouraged its clients to utilize its point of sale (POS) services in supermarkets and fuel filling stations.
FDH Holdings’ Senior Marketing Manager, Ronald Chimchere said on Monday that as a leading digital financial service provider, they decided to inculcate the cashless culture which is convenient for the public as they don’t have to carry too much cash on them.
He also said this reduces paper money transactions — thus lessening the burden by the financial regulator, RBM from continuous replacement of bank notes.
“Printing of bank notes is very costly as it is done outside the country and if we help the regulator from continuous replacement of paper money, we contribute towards the control of our economy [by saving on forex through its printing costs].
“From the outset, CoVID-19 pandemic’s preventive measure of observing social distance and staying at home, motivated people to carry on their daily business transaction through digital means and we decided to enhance this spirit through this promotion.
“We are extremely pleased that our clients responded positively as their support was overwhelming. We encourage clients to continue the spirit of doing cashless transactions as we migrate into a digital world.
“There are no transaction fees attached to our POS services as they would be required to pay when cashing out bank notes at our ATMs,” Chimchere said.
Follow and Subscribe Nyasa TV :
