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

China security ties
Updated 14 Nov, 2024

China security ties

If China's security concerns aren't addressed satisfactorily, it may affect bilateral ties. CT cooperation should be pursued instead of having foreign forces here.
Steep price
14 Nov, 2024

Steep price

THE Hindu Kush-Himalayan region is in big trouble. A new study unveiled at the ongoing COP29 reveals that if high...
A high-cost plan
14 Nov, 2024

A high-cost plan

THE government has approved an expensive plan for FBR in the hope of tackling its deep-seated inefficiencies. The...
United stance
Updated 13 Nov, 2024

United stance

It would've been better if the OIC-Arab League summit had announced practical measures to punish Israel.
Unscheduled visit
13 Nov, 2024

Unscheduled visit

Unusual IMF visit shows the lender will closely watch implementation of programme goals to prevent it from derailing.
Bara’s businesswomen
13 Nov, 2024

Bara’s businesswomen

Bara’s brave women have proven that with the right support, societal barriers can be overcome.