Central bank not to issue new small banknotes for Tet
Central bank not to issue new small banknotes for Tet
The State Bank of Vietnam will not issue new banknotes with denominations lower than VND2,000 (US$0.1) for the occasion of the Lunar New Year to save expenses as bills with such small face values are being used as donation money, not as a means of payment.
Used banknotes of VND200, VND500, VND1,000, and VND2,000 denominations that still meet quality standard will continue to be circulated during the Tet holiday, which begins January 31, SBV deputy governor Dao Minh Tu told a press meeting in Hanoi on Wednesday.
Tu asserted that there is already an adequate supply of such bills to meet demand.
As a Tet tradition, Vietnamese people usually donate money of small denominations to pagodas and temples in a bid to wish for luck in the new year.
But this has now become the only function of such small-denomination banknotes.
“Money should be used for payment, not for festive activities,” Tu said.
The deputy governor said small notes have increasingly been used as religious donation money, especially by people in the northern localities, rather than as a means of payment.
In fact, only a small proportion of small money are actually used in daily payments, with traders refusing to accept them and consumers accordingly hesitant to pay in small denominations, according to the deputy governor.
This has prompted the central bank to limit the printing of new notes this year, he said.
Tu added that it costs the SBV some VND300 billion ($14.15 million) every year to issue new money with small denominations.
“At a time of troubled state budget, VND300 billion can well be used for other purposes such as building schools or hospitals,” he said.
The central bank will also ensure the supply of new banknotes of higher denominations, from VND5,000 to VND20,000, to meet the demand of giving them as lucky money to children, another tradition observed during Tet.
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