CAIRO: In a bid to relieve people involved in major purchases and business transactions from lugging huge cases sagging with cash, the Central Bank of Egypt put into circulation on Sunday LE 200 banknote, marking the beginning of minting of higher denomination notes.
After a major drop in the value of the pound vis-à-vis the dollar, the loads of cash circulating across the country only got bigger, adversely affecting major commercial activities.
“The introduction of banknotes of higher value aims to facilitate extended business transactions, especially in light of the currently high inflation rates, said Magdy Sobhi, economist at Al Ahram Center for Political and Strategic Studies. “Banknotes of less value are losing their purchasing power which causes people to drag along huge piles of cash whenever they engage in any commercial activity.
With a sharp fall in the value of the Egyptian pound, Sobhi explained, the market needed banknotes of higher values because business people would then exchange fewer notes, putting a faster pace to their business transactions and thus lowering the costs of these transactions.
Until last Saturday, the highest denomination in Egypt’s currency was LE 100. After the complete integration of the LE 200 banknote into the market, the CBE will issue another LE 500 to mark the Sixth of October victory celebrations.
“Minting of higher value banknotes saves operating costs for the Central Bank of Egypt (CBE). Instead of printing a specific number of LE 100 banknotes, the CB will now print half that amount for the LE 200 banknotes, thus saving print and paper costs, Sobhi added.
The CBE believes that introducing higher value banknotes is evidence of a strengthening economy. As reported in the local press, officials at the CBE firmly deny that the larger denomination notes signal the deterioration of the value of the pound, confirming stability of the currency on the market.
Officials also expected that higher value banknotes would make effective use of services the banking system offers like card payments, gradually transitioning away from a cash economy. They also promised a better quality of printed notes with the new banknotes.
Sobhi predicted a positive public reaction to the new introductions.
“Nowadays, people do not want to deal with smaller banknotes because they basically lost their premium value. A LE 200 banknote is just under $35 which means carrying higher values of cash that consume less space in our pockets.
He added that people would have no trouble dealing with the new banknote as long as they can easily break into smaller notes after they make a purchase.