In  view of the upcoming Dashain festival, Nepal Rastra Bank has started distributing new currency notes from September 13. The customary practice of using new notes while receiving tika in Dashain creates the demand for new notes. And, every year, NRB spends millions of rupees in printing and circulating new banknotes.

A bank note is a type of negotiable instrument and a medium of payment.  Nepal Rastra Bank issues  bank notes and coins. Since its establishment in 1956 the central bank of Nepal has been issuing bank notes. People use bank notes as a store of value and a medium of exchange when buying or selling goods and services. The central bank seeks to ensure that there is a balance in demand and supply of its bank notes and the public do not lose confidence in bank notes.

A bank note is not an ordinary paper. They require secured printing methods to fight counterfeiting and forgery. Major costs of banknotes are manufacturing or issuing costs, wear costs, cost of transportation, destruction cost etc. So, every note we have in the market has a lot of investment from the government. Banknotes are the property of a nation. Bank notes represent a nation through pictures and images printed on it.

Bank notes go through a cycle. The central bank analyzes the demand projection of each denomination for 3.25 years, gives the printing order to qualified printers, manages the stock and circulates them according to the demand. The demand of cash/bank notes is influenced by the factors such as inflation, seasonal increase in consumer spending, holidays etc. For instance, in our case, demand of new notes soars in Dashain. It is estimated that bank notes last for a year or two on average before they end up being torn and washed up in pockets. If we look at the cash cycle and overall note printing process, note handling and spending habits of people has economic significance. The more notes stay in circulation with a high equation of exchange the less costly it will be for the central bank to print new notes and bring them in circulation. Let us make good use of paper money as it is environment friendly and will save millions of rupees every year.

Bank notes have increasingly been displaced by debit, credit and electronic money transfers in many countries. However, it is not the case in our context as we lack proper policy, mechanism and platform.