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The Ethiopian government has unveiled a new set of banknotes that are expected to help authorities in curbing cash hoarding, illegal trade and illicit financial flows. The move is also aimed at boosting the liquidity of banks that are struggling to cope with Ethiopia\u2019s cash-based economy. <\/strong><\/p>\n In a statement released via Twitter on September 14, the country\u2019s Prime Minister, Abiy Ahmed Ali announced the unveiling of the \u201cnew Birr notes for 10, 50 & 100 denominations, with the introduction of a new Birr 200 note.\u201d<\/p>\n Meanwhile, a report<\/a> says the government plans to spend about $97 million (3.6 billion Ethiopian Birr) printing the new notes. On the other hand, Ethiopian citizens are expected to replace their old notes within three months.<\/p>\n The Ethiopian government\u2019s decision to demonetize follows persistent calls for such a move by Ethiopia\u2019s Bankers Association. The bankers contend that the $3.05 billion circulating outside the banking system has \u201cexacerbated the liquidity problems commercial banks have faced this year.\u201d<\/p>\n The report also quotes Wasihun Belay, a development economist based in Addis Ababa who acknowledges that while \u201cchanging currency is costly and expensive\u201d he still argues that \u201cit is very important to the economy.\u201d The development economist adds that \u201cintroducing new denominations is a step in the right direction\u201d and says \u201c500 and 1000 notes\u201d must be introduced as well.<\/p>\n The Ethiopian economy, which been hit by the global pandemic Covid-19, faces increased inflationary pressures after the figure topped 20% in August. This follows increased printing of currency to finance the country\u2019s budget deficit. Both the World Bank and IMF have now downgraded the country\u2019s forecasted annual growth to 3.2% from 7.2%.<\/p>\n Still, Yinager Dessie, governor of the National Bank, is optimistic that the \u201cintroduction of the new notes is going to be instrumental in reduce cash-based transactions.\u201d In August, the National Bank introduced cash withdrawal and limits on withdrawals as it moved to influence activity in the informal economy which \u201chas a substantial share in the economy.\u201d<\/p>\n Ethiopia last demonetized its currency at the end of the Ethiopian-Eritrean deadly civil war two decades ago.<\/p>\n What do you think about this move by the Ethiopian government? Share your thoughts in the comments section below.<\/strong><\/em><\/p>\n The post Inflation Hit Ethiopia Demonetizes Currency To Curb Cash Hoarding<\/a> appeared first on Bitcoin News<\/a>.<\/p>\n![\"\"](\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2020\/09\/abiy.png\")
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