EVERY Eid, the State Bank of Pakistan issues fresh notes. This creates a demand and supply imbalance of money because this issuance is not backed by gold or foreign exchange reserves.

The issuance of fresh currency notes is a crucial part of monetary policy which requires the backing of reserves to keep the economy stable. For Eid, the issuance is not routed through this process and results in a serious disequilibrium leading to inflation.

Another downside of fresh currency notes on Eid is that bankers face unreasonable demands from account holders for fresh currency notes. In some cases, the bank branch staff has no option except purchase bundles of fresh currency notes from the black market to meet customers’ wishes. This has created a black market where fresh currency is sold at very high rates with the advent of Ramazan.

The State Bank has taken a number of initiatives to tackle the matter but failed to address the issue.The SBP and federal government need to revisit and permanently resolve this matter.

Muhmmad Anus Khan

Karachi

Published in Dawn, July 8th, 2017

Opinion

Editorial

Counterterrorism plan
Updated 23 Nov, 2024

Counterterrorism plan

Lacunae in our counterterrorism efforts need to be plugged quickly.
Bullish stock market
23 Nov, 2024

Bullish stock market

NORMALLY, stock markets rise gradually. In recent months, however, Pakistan’s stock market has soared to one ...
Political misstep
23 Nov, 2024

Political misstep

FORMER first lady Bushra Bibi’s video address to PTI followers has triggered a firestorm. Her assertion implying...
Kurram atrocity
Updated 22 Nov, 2024

Kurram atrocity

It would be a monumental mistake for the state to continue ignoring the violence in Kurram.
Persistent grip
22 Nov, 2024

Persistent grip

An audit of polio funds at federal and provincial levels is sorely needed, with obstacles hindering eradication efforts targeted.
Green transport
22 Nov, 2024

Green transport

THE government has taken a commendable step by announcing a New Energy Vehicle policy aiming to ensure that by 2030,...