DEMONITISATION

No excessive huge deposits of old Sh1,000 notes - CBK

In Summary
  • CBK revealed that 116 million pieces of old Sh1000 notes had been exchanged by end of August
  • The governor was tight lipped on total transactions so far, promising to give updates after the September 30, deadline
Central Bank Governor Patrick Njoroge arrives for the MPC press conference on September 24, 2019.
Central Bank Governor Patrick Njoroge arrives for the MPC press conference on September 24, 2019.

The Central Bank of Kenya is yet to receive any reports on banking of eyebrow raising amounts of Sh1,000 notes ahead of the September 30 deadline.

Governor Patrick Njoroge said most people exchanging old Sh1,000 notes are doing so in small volumes, with only 24 transactions above Sh2 million.

Speaking at at a post Monetary Policy Committee (MPC) briefing yesterday, Njoroge said most of the currency conversions are small in value with 91 per cent of exchange in value terms being less than Sh2 million.

"We have not witnessed huge exchanges as people may think. Actually, Only 24 transactions were above Sh2 million and the average of that was Sh3.1 million," he said.

As at September 1, 58 per cent of currency exchange in value terms was less than Sh500,000 while 75 per cent of exchange in value terms was less than Sh1 million.

The governor did not however give the latest figures for transactions so far, promising to give updates after the September 30, deadline.

He said that 116 million pieces of old Sh1000 notes had been exchanged by end of August. This translates to a value of Sh116 billion out of Sh217 billion value of the old currency in circulation as at June.

On June 4, CBK issued rules to guide replacement of the Sh1,000 notes, which accounted for 83 per cent of the Sh540 billion in circulation or Sh217 billion. The Sh500 notes accounted for 5.9 per cent, Sh200 (4.2 per cent), Sh100 (4.8 per cent) and Sh50 (1.9 per cent).

Yesterday, financial analysts and economists were of opinion that although it will be impossible to convert all the old notes in circulation, the amount which will become obsolete will have little or no impact on the economy.

Speaking to the Star on phone, Abraham Muriu, country manager International Budget Partnership said by September 1, old notes which may not have been exchanged will cease to be legal tender, hence of no value to the economy.

 

‘’That will only impact individuals holding them. It will have no effect on currency supply because it will be out of the financial system,’’ Muriu said.

Same sentiments are shared by Jibran Qureishi, regional East Africa economist at Stanbic Bank who insists that once they become obsolete, they lose weight on the economy.

CBK has insisted that it will not extend the grace period for conversion. Other old denominations will remain operational.