The National Bank of Ethiopia (NBE) has commissioned a study to introduce a 200 birr note as the highest legal tender instead of the hitherto 100 birr note.

Considering the inflation in the economy, which surged to 39 percent in July, a currency with 100 birr note as its highest denomination cannot sustain the volume of transaction in the economy, experts say.

Some of the local banks which have installed the Automatic Teller Machines (ATMs) have been requesting the central bank to consider issuing a currency of higher value than the 100 birr note.

According to the banks, so far, a customer can withdraw no more than 4,000 birr at a time from the ATM due to the lack of larger notes.  

According to some experts on economy think that facilitating banking operations like the ATM are not the only reason for introducing the 200 birr notes. The volume of transaction in the economy is expanding year-on-year, while the purchasing power of the birr in the local market is diminishing.

According to some economic analysts, the Ethiopian financial system, which is not fully automated yet, is another reason for considering a move to a larger bill. Besides, carrying around large amount of cash with 100 birr as its highest unit is becoming a difficult task.

Source: The Reporter