KAMPALA, Uganda's central bank the Bank of Uganda last week clarified that the dual circulation of old and new bank notes that were issued in May 2010 has absolutely no relationship with the current inflation levels. The bank said that it is because the overall quantity of money issued did not change due to the introduction of the new notes.
Inflation on the other hand is high because of supply side shocks to food and international oil prices, and not excessive money supply associated with the new issues of currency notes as insinuated by some sections of the public.
"The Bank of Uganda wishes to respond to concerns from the public about the co-current circulation of the old and new series of banknotes and its relation to the current high inflation in Uganda," indicated a statement issued by the BOU over the weekend.
BoU added that the decision to allow concurrent circulation of both series for some time was deliberate and intended to enable a smooth transition to the new series without disruption of normal business activities among the public.
In addition, the Bank was keen to avoid panic among the population who are distant from banking services.
"There was no need for members of the public to incur costs and bear the inconvenience of traveling to exchange centers that would be necessitated by the sudden outlaw of the old family of notes."
Although no deadline was set to phase out the circulation of the old banknotes, the Bank of Uganda is progressively replacing the old series in circulation with new series banknotes.
Currently, only about 20 percent of the old series remain in circulation. At an appropriate time, the Bank will inform the public when the old series will cease to be legal tender.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment