“Banknotes of the World” №3 2017

Statement by Bank of Russia’s Deputy Governor

There’s a rich variety of payment instruments today – cash, digital and mobile payments – that find their niche very fast to become an essential part of our life. However, figures show that cash remains the most important payment instrument worldwide accounting for 85% of global retail transactions. The share of cash in national retail transactions was estimated at 70.7% in the first half of 2016. Among the reasons for such popularity of cash are ease of use, fast and secured transactions, visual control, independence from payment infrastructure, network and energy, said Deputy Governor of the Bank of Russia Georgy Luntovskiy at the meeting on «Cash circulation. Realities and Development Strategy», held on 9 November 2016 in Sochi.

CASH TRANSACTIONS AT RISK AGAIN

From time to time, we hear Russian high officials and experts talking about a cash ban on payments of high amounts. Earlier this January, this vital for ordinary people topic was debated by the country’s authorities, drawing a demarcation line between staunch supporters and those who considers such limits unnecessary, at least for now. Maybe we should think about setting limits on cash transactions. Many countries are on this way, including India where a large-scale attack on cash transactions is taking place. Many countries are already on this way, because «whitewashing» of economy is a right thing to do. It will allow us to collect more taxes and make our economy more transparent,» said Russian Finance Minister Anton Siluanov at the meeting of United Russia. Deputy Prime Minister Igor Shuvalov, in his turn, told reporters that the Russian government wasn’t considering the issue of setting limits on cash transactions and didn’t plan to impose any administrative restrictions.

BELARUSIANS KEEP THEIR MONEY SAFE BUT NOT AT BANKS

According to the National Survey Report, a vast majority of the Belarusians don’t have any bank account, told to the journalists Svetlana Kroitor, Head of Social Science Innovations Department of the Social Science Institute of the National Academy of Science, in Minsk, highlighting the survey results, based on a 8,000 public opinion poll. The report was prepared in the framework of the joint project between the Social Science Institute, the National Bank and the Alliance for Financial Inclusion (AFI). The main focus was given to financial service accessibility in different areas of the country’s financial market. «11% of the population keep their money safe at a bank account,» Svetlana Kroitor pointed out. «Thus, circa 90% of the residents don’t have any bank account, according to the report, she added. At the same time, compared with 2012 national survey, the number of bank account holders dropped from 18% to 11%».

Switzerland reduces number of cash desks

Swiss Migros and Coop banks have embarked on a path of change: credit institutions are gradually closing cash desks in their branches. As a result, in order to make cash transactions (for example, to simply withdraw 200 Swiss francs in cash), a customer should use the ATM. It will be impossible to address bank’s employees with the similar request. At first glance, there is nothing unusual in this move, except one thing: the absence of cash desks allows the bank not to have cash at all, which can be estimated as unspoken control over cash circulation. This article, based on the materials taken from Sweitzaria Delovaya portal (Businesslike Switzerland) gives a detailed insight.

New banknote in Ukraine?

What are the reasons behind and who will be featured on the new note? These two issues sparked animated, not to say hot, debates of Ukrainian media about the plans of the National Bank of Ukraine’s (NBU) to issue a new 1,000-hryvnia banknote. Timing for designing and issuance of the new banknote seem to be undetermined so far. At least, there’s no news on this matter. «All information about the 1,000-hryvnia note is still classified», deputy governor of the NBU Dmitry Sologub told journalists in Kiev. «It’s not yet allowed to say who will be featured on the banknote, as all the documents concerning this are in the top-secret red folder. But I think that we will set out the design very soon», Sologub outlined. At the same time, he noted that «NBU’s estimations were in favour of introducing a high-denomination note». This how his explanations sound without any editing: «In general, if you look at the banknote system, there is an optimal point. If you make a really big note, then it stimulates the shadow economy. As, for example, it is said about 500-euro notes that are removed, because this is a favorite banknote of counterfeiters or drug dealers. And our estimations showed that in conditions of how the monetary base has changed, how the level of prices in the country has changed, the introduction of the 1,000 note is optimal, after all».

«And shall the counterfeiter be put to death…»

Late December 1768, the empress Catherine II signed a respective decree establishing first paper money that was introduced next year in Russia. Today we call it either banknotes, or currency notes, or otherwise, but then it was called assignations. Their appearance is explained not by good circumstances, but as it is traditionally said due to state budget deficit. The situation around the state budget under the rule of Catherine II stressed the need to consider issuance of paper banknotes. Since the Russo-Turkish War (1768–1774) the state budget deficit reached up to 1,880,100 rubles, with 1,800,000 being spent on the war needs. Several projects were set out to Catherine suggesting issuance of a new type of banknotes. These initiatives were devised by the Count Karl Sievers and the Duke Alexander Vyazemskiy, who argued that issuance of paper banknotes had been the most preferable option in all terms compared with minting of copper coins.