Ethiopia Begins Circulating New Currency
Ethiopia has begun circulating new currency notes to combat monetary crimes. Prime Minister Abiy Ahmed announced on Monday the release of the birr in denominations of 10, 50 and 100. The East African country also introduced its first 200 birr note.
Ethiopians welcome a new year. Prime Minister Abiy Ahmed has announced the release of new birr notes in efforts to fight financial crimes. New notes of denominations 10, 50 and 100 were released Monday alongside the first-time introduction of the 200 Birr note. According to the premier, Ethiopia is withdrawing the old notes to crack down on “corruption, embezzlement and contraband.” And thereby further stimulate the economy hard-hit by factors including the Covid-19 pandemic.
“Introducing the changes in our currency notes was deemed necessary to salvage the country’s fractured economy.” PM Abiy told the country’s high profile political, financial and security officials in a meeting on Monday.
“Money outside the banking system has been rising, affecting the liquidity of commercial banks. This is in addition to its impact on bolstering illegal trade activities,” said Abiy in a statement. Local banks have long called for a change in currency via Ethiopia’s Bankers Association. Noting that over 113 billion Ethiopian Birr lives outside of the formal banking system exacerbating the liquidity problems commercial banks have faced this year.
While some claim that the demonetization has a political purpose only, many economists and policy experts agree that the demonetization would have a huge implication for the country’s economy. Dr. Costentinos Beheretesefa, a policy scholar said it is not the right assessment to view the demonetization only from the perspective of politics alone. Those who have deposited the money in circulation in a hiding-place are not engaged in fair and legal economic conduct. “Whenever money goes into the Bank, it will add value before it once again gets into the hands of customers. It is also difficult to make plans nationally unless all the money is in circulation.
