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As from midnight tonight, 31st March 2017

Qatar News 31/03/2017

President Sillysena has declared that all large notes in circulation will cease to be legal tender as from midnight, tonight (31st March, 2017)

This follows the overwhelming success of a similar masterstroke by his Indian Counterpart, Prime Minister MOGLI in November last year.
With one single directive, all black cash was eliminated and the banks recorded record deposits ever since. Being hard pushed to raise funds to repay foreign loans, the GOSL had to act swiftly.

The Victory Rs./ 1,000 note

Parliament was not privy to this bombshell announcement. Ministers and Members of Parliament were only told, in strict confidence, to A?quickly dispose of their hordings of A?the controversial Rs./ 1,000 “Victory” A?note. This was issued by a former Government.
Many believe that a huge warehouse full of such notes still exists.

Largest legal tender note as from today:
This is enough to buy 2 Cigarettes.

Statement from Temple Trees:

“I have reached today’s decision to demonetize Rs./500 up to the Rs./5000 currency notes in circulation in the economy as bold and revolutionary, and one that will have tectonic impact on the ubiquitous parallel economy in the country. The move will significantly strengthen the government’sA?systematic effortsA?(including special investigation team on black money, amending DTAA with India, Mauritius and Cyprus, amending the Benami Transactions Act, and the more recent Income Declaration Scheme) over the last two years to curb black money in the economy”

A?USAIDs Press release:

“In a single master stroke, the government of Sri Lanka has tackled all three malaises plaguing the economya??a parallel economy, counterfeit currency and terror financing”

 

Statement by Central Bank warden Mr. India Rancit Coma- Rastaswammy:

“I am honoured that the Government has followed my advice”

With our latest move, it is reasonably clear that the economy stands to benefit on several fronts:

1. Boost deposit base and savings

Global agencies have pegged the size of the parallel economy with the US $ at close to 23% as of 2007. Basis this, we estimate unaccounted cash in the economy to the tune of Rs./4500 billion, of which a certain significant proportion will make its way to the banks, thus boosting deposit base as well as financial savings:

• The banks’ deposit base is expected to receive a fillip of 0.5-1.4% of GDP.
• In turn, financing savings can be expected to rise by close to this proportion due to switch from savings from unproductive physical assets to financial assets.

2. Improve monetary transmission and reduce lending rates

• A rise in deposit base will allow banks to lower the blended cost of funds as higher CASA (current accounts, savings accounts) deposits help to replace the high cost of borrowing and lower overall cost of funds. We expect banks to reduce deposit rates by ~125 bps over the next six months.
• The new regime of MCLR (Marginal Cost of Funds based Lending Rate )will immediately take into account the lower cost and will thereby lead to a decline in lending rates, which will boost economic activity in the medium term.

3. Create room for further monetary accommodation

Continue reading ‘ALL Rs./ 5,000, 2,000, 1,000 & 500 Notes declared invalid !’