By Richard Giedroyc
It’s a longer and more gentile approach than was initially planned, but it is official, Bangladesh’s small change coins will be phased out gradually rather than being demonetized on short notice.
On Jan. 12 Bangladesh Finance Minister A.M.A. Muhith announced the immediate withdrawal of all coins and bank notes below the denomination of 5 taka. This would have included the circulating 1- and 2-taka coins. Both of these and the 5-taka denomination are currently available in both coin and bank note format. Bank of Bangladesh bank notes are also issued in denominations of 10, 20, 50, 100, 500, and 1,000 taka.
According to a Jan. 20 The Financial Express newspaper story, “Many had expressed their displeasure on the decision to withdraw coins and notes of small denominations, saying that it will raise inflationary pressure. Hundreds of thousands of people were found active in social media to express their anger. It remained talk of the town since Mr. Muhith’s sudden announcement.”
Muhith’s announcement was met with opposition not only from the public, but from prominent individuals as well. State Minister for Finance M.A. Mannan said of Muhith’s decision, “You can’t do that. The smallest unit is one. It’s universal.”
Mannan continued, “I have talked with the finance secretary. No move is there to withdraw the notes in question from circulation.”
Muhith was quick to reverse his decision, but it may have been more than a public outcry that impacted his change in plans. On Jan. 19 Executive Director of the Bangladesh Bank M. Mahfuzur Rahman announced a recently negotiated letter of credit with a concern in Germany through which paper for printing 2-taka bank notes would be imported. Rahman said the central bank would provide the 1- and 2-taka coins and bank notes “in line with the market requirements.”
At a Jan. 19 meeting in Dhaka Muhith said, “We can’t just forcefully withdraw bank notes that are in the market. They will cease to exist if people stop using them.”
The central bank (Bangladesh Bank) issues coins and bank notes in denominations of 5 taka to 1,000 taka, while the finance ministry as custodian of the treasury issues the lower denominations coins and notes.
The Bangladesh Bank plans to issue 50 million 2-taka notes once the paper is imported from Germany. An additional 150 million notes will be issued in phases.