|Customers collect change at a shop offering the service. Demand for crisp, small denomination notes to be given as "lucky money" soars during the Tet holiday. — VNA/VNS Photo Quy Trung
HA NOI (VNS)— The State Bank of Viet Nam announced it would not issue new small bank notes during Tet, in a bid to cut back on shortages of small bills.
The decision marked a new practice by the central bank, which was originally motivated by the dwindling State budget.
This Tet, SBV will introduce once-used notes in denominations of VND500, VND1,000 and VND2,000, while issuing new VND5,000 notes and above, as usual.
In previous years, SBV issued a certain amount of new small bank notes to meet busy over-the-counter transactions during the Lunar New Year – the largest traditional holiday for Vietnamese.
Not including the expenses for storage and transportation, as well as printing and distributing notes of denominations under VND2,000 (10 US cents) during Tet, the costs to the State budget each year for issuing small notes was VND300 billion (US$14.28 million).
However, the central bank reported that these small notes were mostly used for festive purposes at temples, pagodas and other religious practices in a bid to wish for luck in the new year, instead of being used for payments. Then the "religious money" was shifted back to SBV for exchange of larger bills.
"In the context of a limited State budget, if we can save that VND300 billion, it's more worthwhile to spend that amount of money on social welfare," said Dao Minh Tu, the central bank's Deputy Governor.
The latest move by the central bank also aimed to end the proliferation of note exchange services opening on every corner during the Tet festival.
Nguyen Hoang Ha, who participates in religious practices, said: "The suspension of issuing new small notes is right. I do not think it would affect much of our routines at pagodas or temples, because the styles are changing: I use a big note once, rather than leaving small notes many times."
Another buddhist, Do Thi Hai, who worships in pagodas every Tet, said: "The short supply of new small notes would encourage people to spend large notes and use them in a better manner. When they hold lots of small notes, they throw them into ponds, wells and along lanes by temples to wish for luck. I think this is not a good attitude to have towards money."
The State Bank of Viet Nam will collaborate with the Ministry of Industry and Trade, the Ministry of Public Security and municipal authorities to investigate note exchange services by both individual or organised groups.
In a bid to secure the supply of cash for Tet, the central bank has already reviewed cash demands in every city and province to be sure that its branches are well-prepared with enough cash.
SBV and commercial banks will work with companies to reschedule salaries to relieve pressure on ATM systems, and to set up additional counters at banks to respond to the demand for cash withdrawals. — VNS