The State Bank of Vietnam (SBV) will not print new small-denomination banknotes this year even though demand for them is high with the Lunar New Year drawing near, an official said this week, adding the move has helped save more than US$50 million.
The SBV has stopped issuing new VND500, VND1,000 and VND2,000 banknotes since 2013, and will add the VND5,000 bill to the list this year, Dao Minh Tu, deputy governor of the central bank, told reporters in Hanoi on Wednesday.
Vietnamese people are usually in massive need of banknotes with face value below VND10,000 during the Lunar New Year, or Tet in Vietnamese, to give away to children as lucky money, or to pagodas as religious donations.
But the costs to print, count, transport and store these banknotes are even bigger than their value, Tu noted.
By not issuing new banknotes of such face values, the central bank has saved VND1.08 trillion ($50.52 million) for the state budget, Tu said.
“The sum is huge amid these difficult times and it can be used for other crucial tasks such as building new schools and hospitals,” he said.
The SBV official said the decision is intended to prevent the small banknotes from being abused in cultural, festive and religious activities.
Visitors to pagodas across the country during Tet tend to scatter notes of small denominations on altars, and even thrust the money anywhere accessible, including tree bases, the Buddha’s and deities’ hands, costumes and even ears, believing that the more money they donate, the more good luck they will receive.
Money scattered at the Ba Chua Kho temple in Bac Ninh Province, situated in nothern Vietnam
“And after Tet, such money will return to banks and fill their treasures,” he said.
Small banknotes are of little use in daily social activities due to the high price of most products and services. For instance, with Vietnamese bread fetching at least VND10,000, one could hardly pay in VND200 or VND500 notes.
Still, many ‘money exchangers’ can easily be seen in front of pagodas and temples to help visitors have money of small denominations for their religious donations.
A money exchanger is pictured in front of the Ba Chua Kho temple in Bac Ninh Province, located in northern Vietnam.
Tu from the SBV asserted that this is “an illegal activity,” but few money exchangers have been penalized.
“So this year, the police, market watchdog officers and SBV inspectors will join hands to clamp down on the illegal money exchanges,” he said.
“Violators can be fined VND20 million-40 million ($932-$1,864) for the act.”
Banknotes currently circulated in Vietnam include VND200, VND500, VND1,000, VND2,000, VND5,000, VND10,000, VND20,000, VND50,000, VND100,000, and VND500,000.