BoT to replace 500/-banknote with coin

The Bank of Tanzania (BoT) plans  to issue 500/- coins, to replace the  current notes which wear off  easily.

Addressing journalists in Arusha, the Central Bank Governor,  Prof Benno Ndulu, said the decision follows complaints from people  regarding the weakness of  the green 500/- bill.

"Coins are more durable with longer life-span of seven years. Banknotes need to be renewed every seven months," said  Prof Ndulu, adding that  because of a wider circulation, the 500/- note  goes through many hands and  gets easily spoilt.

"We have investigated and discovered that the 500/- banknote is the main medium of exchange," stated Prof Ndulu.

According to the BOT governor, banknotes   go into circulation  for an average of seven months before starting to wear-off, after which they are collected and destroyed at the BOT base in Dar-es-Salaam.

"Strange enough, the 500/- bills  are not returned to the  BoT as frequently as we  had expected. That could be the reason for the bill to lose its physical value," said Prof Ndulu.

He said the 2,000/-, 5,000/- and 10,000/- denominations   are being banked more frequently than 500/- and 1000/-  notes.

"The only way is for BoT to produce coins. Besides, we have not produced new coins for years and the  latest such release was the 200/- coins range which is the highest valued penny in circulation today," said Mr Ndulu.
 
The BOT governor also said that the Central Bank continues to honour   5 cents, 10 cents, 50 cents, 1 and 5 shillings  coins."They are all legal money and people and especially traders should find ways of putting them into  use," stated the BOT governor.

Minister for Finance and Economic Affairs Mr Mustafa Mkulo said Tanzanian currency would be valid in Kenya, Uganda, Rwanda and Burundi from January 2013, in line with the East African Community Monetary Union protocol.

"The ultimate goal is for the five EAC member states  to use a single currency. We are preparing a Memorandum of Understanding to that effect," said Mr Mkulo.

Mr Mkullo  who was speaking during the just ended EAC conference on financial sector integration in the region added that the heads of state are expected to sign the protocol during  their forthcoming summit meeting  in December.Tanzania, Kenya and Uganda use the shilling while  Rwanda and Burundi use Francs.  
Source: The Daily News,www.dailynews.co.tz, reported by Mark Nkwame in Arusha
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