Banknote Production

Congo To Issue New Banknotes

The Democratic Republic of Congo announced it would release three new higher denomination banknotes next month.

Currently, the highest denomination in circulation is the 500 Congolese franc. The new bills will introduce denominations of 1,000, 5,000, and 10,000 francs.

According to an article published by Reuters, the announcement of these new denominations was cause for concern by some who anticipate that larger notes could destabilize the exchange rate market.

Citizens have pointed to periods of hyperinflation in the country in the 1980s and 1990s when inflation hit 14,000 per cent under former dictator Mobutu Sese Seko.

However, Central Bank governor Jean Claude Masangu told Reuters the move to higher denominations is carefully being watched and the bank has implemented security measures to prevent drastic inflation.

“We think the moment is right to introduce bills of higher values… that are adapted to the needs of the economy,” Masangu said in an interview. “With the level of foreign exchange we have at the moment, we can intervene massively to stabilize the exchange rate if there are any perturbations.”

Currently, Congo relies on US dollars to trade. The country has also seen stable economic growth in the last two years, though a UN report released last year said that 80 per cent of the population is living on less than $2 a day.

According to Reuters, the Central Bank has revised down its growth predictions for 2012 to 6.5 percent from 6.6 percent, blaming the global financial situation, but said it was on track to better its inflation target of less than 10 percent.

SOURCE:
Reuters Africa: “New Congo Banknotes Will Not Spark Inflation: Central Bank”

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