BoZ Goveror's quarterly
media briefing: Currency restructuring
15.10.03
This is an excerpt from the BoZ Governor's quartely media briefing. The Governor, Dr Caleb M. Fundanga, adressed the currency restructuring process.
Currency restructuring
In 2000, the Bank of Zambia Board of Directors decided to
restructure the currency. This decision was aimed at redressing two key aspects
of our currency. These related to: redistributing the concentration in value of
currency in circulation in the high value notes as well as enhancing the
durability and security of notes in the most circulating notes - the K500 and
K1, 000. These changes were also targeted at reducing transaction costs,
including the cost of replacing worn out banknotes.
Subsequently, contracts were awarded in February 2003 for the
printing of Zambian Banknotes to the three successful companies. De La Rue
Currency were awarded a contract to print the K5,000, K10,000, K20,000, and
K50,000; Canadian Bank Note Company printed the polymer notes (K500 and K1,000)
while the South African Bank Note Company printed the K50 and K100.
Following the execution of the contracts, BoZ embarked on an extensive public awareness campaign that started in earnest at the International Trade Fair and the Agriculture and Commercial Show. The country-wide publicity campaigns started on 22nd August, 2003 and were done to prepare for the launch of the new currency, which took place on 26 September 2003.
Following
the official launch of the new high value notes and polymer notes, a problem was
noticed with the polymer K500 and K1, 000 serial numbers. Both the horizontal
and vertical serial numbers were easily rubbing off after using a moist finger
or thumb.
The Bank of
Zambia has been holding meetings with the Canadian Bank Note Company (CBN)
officials with a view to obtaining an in-depth look at the problem at hand and
how best to deal with it. The remedies that CBN has immediately undertaken
include modifying the formulation of the numbering ink to make it faster in
drying and adhering to the polymer substrate. Extensive laboratory tests so far
indicate that the ink problem has been resolved. CBN has accepted full
responsibility of this unfortunate error on the ink
on the serial numbers.
The Bank is
also assessing and gauging the public’s comments and reaction. Those with
comments must forward them to the Head of Public Relations.
The Bank of
Zambia has recalled all the polymer notes from the commercial banks. The total
amount that is remaining in circulation is now less than K4 million.
In order to
maintain a steady supply of banknotes in the K500 and K1, 000 denominations, the
Bank has stepped up processing of re-issuable notes so as to ease the demand for
this particular category of notes. Further, the Bank will continue supplying the
K50 and K100 notes to mitigate demand pressures on the two denominations of K500
and K1, 000.
The
Bank is confident that once the polymer notes are issued in circulation, after
subjecting them to the additional tests that the Bank will undertake, the
present problem will be resolved as the benefits of polymer notes over paper in
Zambia’s case is not in doubt. In this regard, the Bank wishes to assure members
of the public of its utmost commitment to ensuring that this matter is resolved
in the best interest of the nation within the most efficient time-frame, bearing
in mind the overriding need to protect the image of the Bank and nation at
large. To this end, the Bank will provide regular updates to the public as
events unfold.
