While some welcome the $5000 note with open arms, others seem to be quite skeptical when they consider its possible implications on the economy. The new note comes into circulation on December 9.
Many are of the belief that the new note is too large and that it is in response to inflation or probably will lead to inflation. But Chartered Accountant and lawyer, Christopher Ram, said that the denomination is simply too high. “We need a whole rearrangement of currency, especially of the smaller notes.”
“I would not have gone for such a high note. Instead, I would have gone for a $2000 note. In a society where you are trying to move away from cash, this sends the wrong signal …I fail to see the rationale and the economic logic of the $5000 note.”
On the flipside to Ram’s comments, Financial Analyst, Ramon Gaskin, however, is in full support of the new note. He said, “It is a small amount which in essence translates to US$25 but we also need a $2000 note. I would also call for a $10,000 note. Guyana is culturally, a cash-oriented economy and I think the introduction of those other notes would be helpful.”
A Partnership for National Unity’s (APNU) Shadow Minister on Public Works and Telecommunications, Joseph Harmon, believes that there is both good and bad in introducing the note.
“The new note simply shows that we have too much of a heavy reliance on cash and not becoming as sophisticated as other countries. Large sums of cash just continue to make us easier targets for robberies. We should also consider having more banking facilities in the interior region. The bigger notes make it easier to carry around but we need to seriously examine ways in which our system can become more plastic oriented and more facilities constructed to facilitate this.”
Carl Greenidge, APNU’s financial point man firmly asserts that the new note will only serve to be beneficial for the national economy. There is no reason for one to worry about the circulation of the new note, he added.
“While it is expected of the Opposition to be critical of what the Government is doing and demand justification for its actions, this time around with regard to the new note, the general public has nothing to worry about. The purpose of the higher denomination is to make transactions easier. It cannot be convenient to have to purchase something that requires a large volume of money.”
As it relates to the issue of counterfeiting, the Member of Parliament said that it would be very difficult to do so as the note has seven security features that are internationally recognized and are there to protect its integrity. This contention was also supported by the Deputy Governor of the Bank of Guyana, Dr. Gobind Ganga.
Inflation is the process by which the value of goods and services rise over time. If the value is rising overtime, then the currency in which goods and services are traded, will lose their purchasing power and a motor car which costs $100, will cost $120 over time.
Greenidge said, “As new notes come, old ones will be retired, so a set of old thousand dollar bills will be removed from circulation and the $5000 note will be added to the system.”
“I wish to reiterate that the new note is not in response to inflation, it is in response to something that has been called for a long time now and that is; you have to carry around too much money to pay for a normal transaction and I would call for an even bigger note.”
The Georgetown Chamber of Commerce (GCCI) has also expressed its support for the new denomination. However, the Chamber expect that prices on the local market would increase because of the new note since the Central Bank Governor, Mr. Lawrence Williams at a seminar in 2012 guaranteed that the new note is only intended to shift the heavy reliance from the $1000 to the $5000 note.
Mr. Williams had also informed from an historical context that inflation decreased when larger notes were introduced into the economy.
The Governor added that significant savings will be made when the new note goes into circulation.
He said that it costs the central bank between $600 million and $700 million to print current notes. The new $5,000 would reduce the volume of notes being printed.
However, the only disadvantage the new note seemingly brings with it is the use of the $5000 notes to carry out small transactions that would require vendors offering goods to provide many smaller notes as “change.”
As it relates to the electronic purse, Greenidge said that the reason why large businesses like to deal with cash is so that they can evade taxes. The issue of the new dollar note was not meant to solve that problem.
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