- New 1,000-shilling notes to become legal tender in 2024
- Deputy central bank governor says policy will curb inflation
According to Bloomberg article published on January 17, 2023, Somalia’s central bank aims to replace the only high-value currency note still in use by next year to deal with counterfeit bills, excess cash in circulation and inflation.
The redesigned 1,000-shilling notes will replace those printed before the civil war broke out in 1991, central bank Deputy Governor Ali Yasin Wardheere said in an interview in Mogadishu, the capital.
The old currency has almost disappeared and the new issuance will combat illicit funds and curb inflation by mopping up excess liquidity, Wardheere said. Shilling notes still in circulation are too worn out, becoming replaced with US dollars or privately printed notes, most of which are counterfeits.
Nigeria, Africa’s largest economy, is also replacing high-value currency notes to prevent hoarding, stymie illicit activity and contain inflation.
Rebuilding Capacity
The central bank in Somalia has been working on replacing the bills and issuing high-value currency notes since 2018 with the help of the International Monetary Fund and now the World Bank, Wardheere said. It’s also rebuilding its capacity that’s been hindered since the civil war started.
The central bank plans to establish new branches in the capitals of all federal member states by June, including Garowe, Baidoa and Kismayo, according to the deputy governor, who was appointed in November. The regulator had Treasury headquarters throughout the country, where both tax revenues and bank notes were stored, until the collapse of Somalia’s government in 1991.
The branches will help the central bank collect taxes, store money and become the central fiscal agent of the federal states, he said.
The bank has also set up a unit “specifically dedicated to combating the counterfeit money market,” Wardheere said. It will also be responsible for maintaining the value of the new money the central bank plans to print and thus help rein in inflation, he said
Other Highlights
- The regulator plans to digitize its systems to allow banks to send money to one another more conveniently
- Local bank IBAN numbers are being consolidated to improve security
- QR codes have been unified to enable people to send money through their mobile phones in a fast and secure manner
