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Thursday, February 15, 2024

State Bank of Pakistan to Introduce New Currency Notes

The State Bank of Pakistan plans to introduce new currency notes with international security features, sparking cautious optimism from financial experts.

The State Bank of Pakistan (SBP) announced on Monday its plans to introduce new currency notes equipped with international security features, emphasizing that the transition will be implemented without causing disruption. SBP Governor Jameel Ahmad revealed that the new notes would feature new serial numbers, designs, and high-security elements.

The governor stated that the framework for designing these notes is already in progress, expressing hopes for the process to be finalized by March. Notably, Ahmad clarified that the transition will not mirror the sudden and drastic demonetization experienced by India in 2016, avoiding potential social unrest and economic upheaval.

Read More: Nawaz Sharif Labels People of KPK ‘Stupid’, ANP Demands Apology

The decision to introduce new currency notes stems from concerns about the prevalence of counterfeit currency notes in circulation, according to sources familiar with the matter.

Financial Expert Views on SBP’s Decision

Financial expert Khurram Schehzad, CEO of the Alpha Beta Core financial advisory firm, cautiously welcomed the SBP‘s decision as a “positive development” but emphasized the need for careful evaluation. He questioned the effectiveness of introducing new currency notes in addressing the issue of black money, asserting that real progress requires measures to reduce higher denomination currency notes in circulation.

Schehzad highlighted the public’s inclination to convert cash into alternative assets like property, cars, gold, and foreign currencies amid rising inflation. He urged a thorough assessment of discontinuing higher denomination currency notes, such as Rs5,000, emphasizing the historical challenges faced by countries, including India, in achieving success through demonetization.

In response to concerns about the potential impact on the economy, Schehzad emphasized the importance of the SBP controlling the printing of currency notes, a key factor contributing to increasing inflation.

Financial analysts emphasize the need for a nuanced approach, considering the historical challenges associated with similar measures in other countries. The public and stakeholders await further details on the design framework and the central bank’s strategy in navigating this currency transition.