State Bank of Pakistan (SBP) Acting Governor Saeed Ahmad has said that anti-state elements are involved in spreading counterfeit currency in the country to undermine the national economy.
Speaking at a conference on “Currency management: strategies for the future” organised by the SBP here on Tuesday, Ahmad said the central bank is very vigilant on the matter and the media must also create awareness by filming a documentary.
“Also, in this connection, a smartphone application is being developed that will be widely circulated and would help people in identifying fake money,” he added.
According to him, there are many security features in Pakistani currency that can help differentiate between genuine and fake currency notes. These features are very hard to replicate in counterfeit notes. However, people at large are unaware of these features and the campaign will help them in identifying the genuine currency.
“SBP is working to introduce a hologram and other security features in Pakistani currency notes, but since it is a costly project, it is yet to be decided on which denomination it will be added.”
“Hologram should be introduced in both the 5,000 and 1,000-rupee denominations and in lower denominations it will be examined.”
To a question, he responded that the government’s domestic borrowing has declined due to increase in remittances, IMF loans and sale of Eurobonds and sukuk. “Hence, the government has reduced its borrowing cost by shifting reliance from local to foreign borrowings.”
He pointed out that although the government has been criticised for floating both the Eurobonds and sukuk at high rates, in reality they have managed to save money because the rate in the local market was 10-12%, while the bonds were offered at 7% in the international market. Ahmad said that the SBP sees the total transformation of cash processing business from manual to automation in the next five years and would like to see commercial banks aligning their plans with the SBP in this regard.
Without joint action, the desired results to improve the quality of currency notes in circulation will not be achieved.
“Being cognisant of this responsibility, the SBP has been investing in significant human and financial resources to take this important function to a higher level,” he said.
He admitted that while the SBP and the banking industry are largely on a par with international best practices and standards both in regulation and supervision and service delivery, “we are far behind in modernising and automating the currency management processes.”
Ahmad elaborated that the SBP has been making extensive efforts to implement its clean notes policy for the last 10 years but with limited success largely due to lack of automation in cash processing.
“We have thus planned a fast-track automation of currency management function both at the central bank and commercial banks.”
Earlier, SBP’s Deputy Governor Operations Kazi Abdul Maktadir, while elaborating the challenges faced in currency management indicated that despite the emergence of various alternatives to cash-based transaction in Pakistan, hard cash maintains its predominant position.
“We have witnessed a significant surge in currency circulation during the last five years, from 2009 to 2014. Currency in circulation more than doubled from Rs1,224 billion to Rs2,500 billion,” he said.
“Every year, on average, 1.9 billion pieces of currency notes of various denominations are printed.”