Editorial

BIG BANKNOTE WILL NOT REDUCE INFLATION

The intention of the Bank of South Sudan to introduce 500 banknote to resolve the staggering economic situation in the country is a policy dead on arrival. The printing of higher denomination of notes to resolve backdrops in the economy is considered the most unprofessional way to tackle an economic situation.

The Central Bank should drop this approach if the intention was to reduce the high inflation rate in the country. The introduction of 500 banknote will instead worsen the inflation; there will be less money in circulation.

I don’t think the higher or lower denomination of currencies has anything to do with inflation. They exist to support easy transactions for highly priced and lowest priced products.

But big note will always make people to demand for more money because it is portable and less risk. In the due course most people shall be willing to keep their money in houses instead of depositing in banks and as a result it creates scarcity of currency in circulation.

Therefore, the Central Bank needs to make a clear policy in order to fight the inflation in the country. Almost three months ago, the Bank had launched five years strategic plan and I don’t think if it was all about the introduction of the big note.

It is a waste of resource to make policies and plans if it is not being implemented at the end. Since independence, none of the Central Governors had come up with a policy favoring economic growth in the country.

The introduction of high denomination currency is likely to increase corruption and weakening of banking system. Some traders would not be interested in accepting large denomination for fear of being cheated on lack of changes for small denomination.

As low currency loses value high denomination becomes more wide spread and the more harmful impact would be fake currency and its consequences on the market.

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