Will the new “200” riyals swallow up the rest of the denominations…?
Yemen
Yamanat
Bassam Ahmed Al-Barq
introduction
The money supply in circulation before 2015 ranged between 1.3 and 1.5 trillion riyals (according to data and reports from the Central Bank of Yemen until the end of 2014).
This mass was distributed between several main paper denominations, in addition to a metal denomination (20 riyals), according to the following proportions:
20 metallic riyals: represent 1 to 2% of the money supply, or 15 to 30 billion riyals.
50 riyal note: represents 6 to 8% of the mass, or approximately 120 billion riyals.
Paper of 100 riyals: represents 20%, or approximately 300 billion riyals.
Paper of 200 riyals: representing 20%, or approximately 300 billion riyals.
250 paper riyals: or 25%, or approximately 375 billion riyals.
Paper of 500 riyals: representing 26%, or approximately 390 billion riyals.
Paper of 1000 riyals: representing 12%, or approximately 180 billion riyals.
This balance has contributed to the stability of the money market, the ease of trade and the control of inflation.
What is happening today in Sanaa?
Sana’a Bank recently announced:
Mint coins in denominations of 50 riyals and 100 riyals.
And print a brand new 200 riyal paper money with a different design.
but Observer:
I’m not talking about the 250 riyal paper note at all, even though it was previously the most widely distributed.
The 20 riyal metal note gradually disappeared, without an official announcement of its cancellation.
The hidden plan of Sanaa Bank:
1. Withdrawal from the market of damaged banknotes (50 and 100 riyals).
2. Pumping out large quantities of the new 200 riyal note to make it the unified alternative, amounting to around 700 billion riyals, instead of substitute currencies which make up 55% of the money supply.
3. Mint symbolic quantities of coins (50 and 100 riyals) for formal or advertising purposes and for limited use in grocery stores and buses, and will not exceed 1%, or approximately 10 billion riyals.
4. Gradually freeze the 250 riyal note, without fanfare.
Why the 200 riyal note in particular?
The intermediate category covers small denomination transactions.
Legally acceptable in their regions.
Saves costs of minting small parts.
Improves the bank’s control over daily transactions.
The denominations that will be replaced represent 55% of the money supply, or 700 billion riyals.
Conclusion:
What is currently being done is not just about “replacing the damaged one”,
Rather, it is a restructuring of the monetary pyramid in areas controlled by the Houthis. In favor of making the new denomination of 200 riyals the dominant denomination in transactions, Instead of the diversity of paper currency denominations as was the case before 2015.
It is planned that the 500 riyal and 1,000 riyal notes will be printed later to complete the control.
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Yemen