Dec 2014 Financial News

Launch of new gold $50 bill on Saturday

Dec 08, 2014

The new TT$50 bill, the country’s first polymer banknote, gold in colour, is expected to be released next Saturday, and go into circulation “over the counter” at commercial banks by mid- December. The $50 notes, being launched in honour of the Bank’s 50th anniversary, are expected to become available through ATMs by the end of February 2015.

Why a new $50 bill when the Central Bank issued its first such just over two years ago for the 50th Anniversary of TT’s Independence? Well, that note did not receive widespread public acceptance even though it intended to help relieve the stress on $100 and $20 notes and make doing business easier.

“Both denominations carry out dual functions of store of wealth and means of payment. The absence of an effective mid-denomination currency such as the $50 banknote requires Central Bank to issue substantially more $100 and $20 banknotes than it should. As a result, Trinidad and Tobago is ranked number one among central banks for having the highest banknotes per capita in the world,” the Central Bank explains on its website.

But some people believed that $50 note was special, and chose to collect it rather than spend it which defeated the purpose of having less wear and tear of the $100 and $20 notes.

Also, the olive green colour of that initial $50 bill made it difficult to easily differentiate it from the green $5 and grey $10 banknotes, especially in low light.

The Central Bank consulted with De La Rue of the United Kingdom, the world’s largest commercial banknote printer, as well as other central banks, and arrived at a decision to use polymer. De La Rue has been printing TT’s currency for the past 50 years, and would print the new polymer $50 bills.

Finance Minister Larry Howai, in a comment, said:

“Before doing the issue, an evaluation was done by the Central Bank to determine to what extent it will be used and that information was shared with the Ministry of Finance and the Economy. The result would have been that the ‘market read’ had suggested that such a denomination would have a better reception now given increases in prices of consumer goods between when the first $50 issue came out and the present time and as such would have greater use.”

The Central Bank declined to say what was the cost of printing the new bills and how many notes will be in placed in circulation initially.

This information, Newsday was told, was protected under the Central Bank Act. Newsday was told, however, that while the polymer notes were more expensive to print than cotton ones, in the long run, the new bill was expected to help reduce the Bank’s costs.

The Central Bank website stated that the polymer $50 notes had “lower vulnerability to soiling and other forms of wear-and-tear” and were expected to last at least twice as long as the conventional cotton notes as a result of less reprinting to replace worn notes.

“This will fully offset the initial higher production cost. This will result in savings of more than 25 percent of total production costs, over an assumed five-year life cycle of the polymer series, when compared with cotton notes,” the Central Bank said.

Speaking at the Third Monetary Policy Forum at the Chaguanas Chamber of Commerce on December 1, Central Bank Governor Jwala Rambarran explained that as banker to the Government, the bank collects quarterly taxes paid to the State by energy companies, money that forms most of the country’s “Official Reserves”.

“Central Bank invests the reserves and we use the interest income we make from those investments to fund the operations of the Bank itself. Central Bank is not funded by the taxpayer, and we do not receive funding from the Government. In fact, it is the other way around. At the end of the fiscal year, we send our surplus to Government,” said Rambarran.

In this context, Newsday was told the bank was using its own funds to print the new notes, not taxpayers’ money.

Source:
By JANELLE DE SOUZA
Newsday
Monday December 8, 2014

http://www.newsday.co.tt/news/0,203973.html