Ethiopia: Govt Revamps Currency Change Steps
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This week the government of Ethiopia unveiled new currency notes replacing the existing Birr note. According to the announcement that the new currency notes include Birr 10, 50 and 100 denominations, with an additional introduction of a new 200 Birr note.
The move will help to curb illicit money transfer, counterfeit and contrabands, it was learnt. Enhanced security features on the new notes aimed at making them more difficult to counterfeit.
Recently, the National Bank of Ethiopia (NBE) issued a new directive that bans persons and companies from keeping over l.5 million Birr in cash out of banks. The objectives of the directive are to prevent illegal money circulation and strengthen legal transaction as well as protect notes from damage, among others.
According to the bank, anyone who deposits more than the stated amount of money anywhere out of banks will be accountable and punished as per the regulation.
While introducing new currency notes Prime Minister Dr. Abiy Ahmed said the introduction of new currency notes is part of the ongoing economic reform in the country.
The government unveiled the new currency notes with enhanced security features on the new notes with the view to making them hard to counterfeiter.Besides the notes that replace the old Birr 10,50 and 100, a new 200 Birr note is issued by the government. The 5 Birr note remains unchanged and will be turned into coin format soon. Prime Minister Dr. Abiy added that a lot of work has been done in the past two years to address the macroeconomic imbalance in Ethiopia which is the main problem of the country.
“Right now the economy is recovering from a recession, adding that controlling inflation has become difficult due to the large amount of money is circulating out of the banking system.”
The large amounts of money circulating outside banks exacerbated the problem, the premier noted, further explaining that the new currency notes would play paramount role in resolving the problem.
He pointed out that the new currency notes are designed to be convenient to use and to serve for long time. Over 3.7 billion Birr has been spent on printing the notes alone.
Abiy stated that the recent directive issued by the National Bank of Ethiopia (NBE) to ban persons and companies from keeping over 1.5 million Birr in cash out of banks will be implemented along with the introduction of the new notes.
All illegal monetary activities that violate the law will result in the arrest of culprits and confiscation of the money seized, he stressed. Similarly, strong measures would be taken against banks and other entities that operate illegally while changing the old notes with the new.
National Bank Governor Dr. Yinager Dessie disclosed on his part that huge amount of Ethiopian Birr has been accumulated abroad, including in neighboring countries. Strong control measures have been put in place to prevent the money from entering the country, he stated.
The old notes should be changed into new notes within three months, the Governor said, adding that persons with 100,000 birr and more must however change them within a month.
The National Bank of Ethiopia (NBE) has begun distribution of new banknotes from Thursday. Dr Yinager Dessie and President of Commercial Bank of Ethiopia (CBE) Abie Sano launched the distribution at CBE-Addis Ababa branch.
The Government of Ethiopia last Monday introduced the new currency notes that have enhanced security features and other distinctive elements. The currency change is aimed at gathering currency circulating informally and outside of financial institution.On the other hand the government also banned selling and buying of properties and the activity must be done only through banking system so as to control illegal transaction of money. The selling and buying of properties if only the parties made the transaction through formal banking system, it was learnt.
The two parties the buyer and seller have to be able to present bank transfer and deposit confirmation Bank Transfer Slips. It also intended to curb corruption and contraband as well as support financial institutions confront currency shortage.
In Ethiopia most of the transaction is being made using cash though in recent years the government has been trying to create cashless society introducing mobile money and internet banking.
The process of changing the currency note needs serious caution in order to control illegal and counterfeit money. The economist also opined that the measure taken by the government will stimulate the overall economy of the country beyond controlling illegal transaction. Changing the currency note will obliged individuals and organizations circulating money out bank to enter the banking system.
Source: The Ethiopian Herald
