• Mon. May 29th, 2023

RBM introduces K5, 000 Banknote and rebrand K2,000

By Malawi Exclusive

Reserve Bank of Malawi Governor Dr Wilson Banda has announced introduction of K5,000 Bank note and the rebranded K2,000. 

Banda said the two will be on the market effective 24 February, 2022. 

“Ladies and Gentlemen, the main purpose of this press conference is to inform you that the Reserve Bank of Malawi will on Thursday, 24 February 2022 release into circulation a higher denomination K5000 banknote and an upgraded K2000 banknote. Please remember the date or, better still, mark it in your 2022 diaries.” Said Banda.

Banda said the Bank introduced the K2000 banknote on 19 December 2016 – that was almost 5 years ago.

The Governor said there are several reasons for introducing the K5000 banknote.

“The Bank is responding to its own Currency Management Policy that provides guidance on how to react to various economic developments. Among other things, the Policy guides that the highest value denomination should not account for more than 60.0 percent of the total value of currency in circulation. 

When that happens, the Bank can apply a number of measures one of them being introduction of a higher banknote denomination. In the present case, our highest value denomination, the K2000 banknote, has been above the 60% threshold for sometime and has hovered above 80%.” He said. 

Banda sid the Bank wants to reduce new note issue costs which again will be achieved as buyers will need one K5000 note to settle a K4000 bill instead of requiring two K2000 banknotes. In that case the Bank will import fewer banknotes than before thereby reducing new note costs.

The Governor said there is also an element of portability saying there is need that all currency has to be easily and economically carried from one place to another.

Banda said the enormous pressure on demand for the K2000 signifies that the banknote is being used for transaction purposes instead of being a store of value as should be the case for higher denominations. This, therefore, calls for a higher denomination banknote to act as a store of value.

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