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Tuesday, November 29, 2022

MK5000 Bill or Bank Note?:RBM has made a cardinal mistake in introducing a higher bank denomination


The Role of Central Bank is to Control Money Supply, Monitor Inflation, Manage Interest Rates and also Supervise Commercial Banks.

Central Bank is where Banks bank their money. Central Bank holds commercial banks reserves hence it is called Reserve Bank.

Tragedy hits when Central Bank takes instructions from crudely educated politicians who are ever hungry for cash.

The Reserve Bank of Malawi has made a cardinal mistake in introducing a higher bank denomination.

Almost everywhere in the world, higher denomination bills indicate runaway inflation rates .

And effects of currency devaluation against other currencies. It encourages money laundering, drug trafficking and all sorts of financial crimes that require movement of large cash piles.The disadvantages of big notes far outweigh the advantages.

There are reasons why stable and rich economies maintain small bills:

1~ US US$100

2 ~ Euro €500

3~ UK £100

4 ~ South Africa R200

5~ China RMB100 called 100Yuan

The opposite was Zimbabwe which issued Z$10 trillion bills.

In Congo, you take money in the Wheelbarrow when going to a shop.

Malawi Kwacha is overly useless in the region.

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