Issuing 1000 Pound: A New Liability Discharge

Report by Nahid Oshi

The Central Bank of Sudan’s is issuing a new 1,000-pound denomination bearing the signature of the new Sudan Central Governor instead of his predecessor, which was printed in August 2023. The Bank of Sudan guarantees the validity of all previous editions and issuances of the 1,000-pound denomination, and consider it cleared of liability.
This step was met with different reactions and view, between those approving and criticizing it due to the circumstances the country is going through. A third group underestimated its impact.
Economist Abdullah Al-Ramadi believes that if the quantities of cash that will enter the economy are for the purpose of replacing damaged paper currency, then the step has no danger or negative impact on the economy in terms of not increasing the size of the monetary mass.

Increasing the monetary mass
In the meantime, he said that the step should carefully take into account that increasing the monetary mass beyond limit means increasing inflation rates, particularly in light of the decline in production processes and the impact of many commercial and industrial activities, which exacerbates the problem.
Al-Ramadi added, “It is more beneficial, in light of these circumstances in which the inflation rate is rising and the currency is losing its value, to print larger denominations,” explaining that the cost of printing large denominations is the same as the cost of small ones.

Cancel large denominations
While the economic expert, Dr. Mohammed Al-Nayer, noted the repeated demands to take a decision to cancel the denominations of (500-1000) pounds and prevent their circulation in the economic activity until the matter is resolved, provided that they are accepted by the banks. He said that it is a step that can have a positive impact on the economic situation in a big way and on the stability of the exchange rate of the national currency.
However, Al-Nayer considered issuing a new edition of the thousand-pound denomination a normal and natural matter that must be followed by gradually replacing the new edition and withdrawing the old one.
He added that planning to print a new currency after the end of the war remains an important matter, reconsidering the structure the Sudanese monetary denominations, and thinking about the invalidity of the 1,000 and 500 pound denominations in economic activity.
It was possible to issue a thousand-pound denomination and deal with it through banks, and other editions would be withdrawn from the market, and the money that had been looted would be known when those supplying huge sums of money to banks are known and the sources could be tracked.
There are many measures awaiting the banking sector during the next stage that must be taken in order to preserve the Sudanese economy and the stability of the exchange rate.

Change Currency
Taxation Expert Ahmed Salem believes that, in light of the circumstances of war, looting, attacks on banks and shops, and the looting and plundering of huge sums of cash that have become in the hands of thieves, the best decision is to change the currency, whatever the cost, and then work on printing smaller denominations (100,50, 20) pounds, as well as reducing the printing of 500 denominations, restricting their circulation, withdrawing the thousand-pound denomination, and preventing its circulation.
He considered printing a thousand-pound denomination in these circumstances an encouragement to plunder and infringement on citizens’ money and property.
A call to cancel the first thousand pounds.

Substitution and Replacement
Economist Dr. Haitham Fathi considers the importance of the step of canceling the first edition of the thousand-pound denomination and adopting the new one, and he justified this on the grounds that the step would render all the quantities stolen and looted during the war, worthless.