Tk 1, Tk 2 notes to be phased out; coins to stay on
The government is set to take out Tk 1 and Tk 2 notes from circulation, Bangladesh Bank Executive Director M Mahfuzur Rahman said.
The coins with the same denominations will still be in circulation, he added.
Rahman's comments came as Finance Minister AMA Muhith said earlier in the day that Tk 5 would be the lowest denomination of notes instead of the existing Tk 2 given the latter's fall in value.
Lower denomination notes are “useless”, Muhith said.
At present, Tk 5 notes and above are issued by the Bangladesh Bank and Tk 1 and Tk 2 notes by the finance ministry.
Given the decline in value of Tk 1 and Tk 2, their share in the total money supply has fallen and so has the government's as a result.
To rectify the situation, the idea of making Tk 5 the lowest denomination of notes was floated at a high level meeting of the finance ministry with Muhith in the chair. Asked if the cost of low-priced items such as chocolates and bus fares would go up if the decision comes into effect, he said: “Is a chocolate available for Tk 1 now?”
The minister said the Tk 1 and Tk 2 notes would gradually be taken out of the market. Once 10 percent of the Tk 1 and Tk 2 notes in circulation have been withdrawn, Tk 5 notes will be issued against them.
AB Mirza Azizul Islam, a former adviser of a caretaker government, said the rise in inflation eroded the value of lower-denomination notes.
He, however, said the government should not completely phase out the denominations.
“If there is no Tk 1 and the lowest denomination is Tk 5, how would you pay for a good priced at Tk 4? Do you pay Tk 5 for a good worth Tk 4?”
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