Banking Analyst: 2,000 Pound Note Enhances Efficiency of Cash Transactions
Sudanhorizon- Hala Hamza
The Academic and Banking Analyst, Dr. Luay Abdel Moneim, has confirmed that the Central Bank of Sudan’s (CBS) decision to issue higher denominations of banknotes, such as the 2,000 pound note, will enhance the efficiency of cash transactions.
Dr Luay told Sudanhorizon that the significant decline in the purchasing power of the national currency has made the current denominations less suitable for meeting daily transaction needs, imposing operational burdens on individuals and institutions.
He explained that higher denominations contribute to facilitating transactions and reducing the actual amount of cash in circulation, especially in areas that still rely primarily on cash.
The expert pointed out that printing larger denominations reduces printing and cash circulation costs, because printing a higher denomination to cover the same value is more efficient than printing large numbers of smaller denominations, whether in terms of printing, transportation, storage, or cash management within the banking system.
He referred to the importance of aligning the currency structure with economic realities, noting that issuing larger denominations is, in many countries, a practical response to inflationary changes and a reorganization of the money supply in nominal terms. This does not necessarily mean an actual increase in the money supply if it is accompanied by sound monetary policies.
He stated that issuing a new currency does not, in itself, create confidence, but it can enhance it if it is part of a broader monetary reform program that includes controlling the money supply, reducing inflationary financing of the deficit, stimulating production, and developing the banking infrastructure.
The expert warned of the impact of higher denominations on inflation if complementary policies are not put in place simultaneously and if increasing currency denominations is not supported by productive and monetary reforms. Such reforms may boost liquidity without a corresponding increase in goods and services, leading to a widening gap between supply and demand and further inflationary pressures.
He called for controlling inflationary financing of the deficit and explained that resorting to printing money to finance the deficit is not a global phenomenon, but its outcomes vary significantly between economies.
He reiterated that issuing the 2000 pound note is not a negative or positive indicator in itself, but rather a regulatory measure whose results are determined by the environment in which it is applied. He stressed that it can achieve its goals if it comes within an integrated monetary and economic policy based on controlling the growth of the money supply, stimulating supply, developing the banking sector and expanding financial inclusion.
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