Azerbaijan, Baku, Feb. 23 / Trend I. Khalilova /
The Azerbaijani Central Bank (CBA) may cancel a commission of 0.3 percent, which has been applied to the commercial banks for each 100 manat banknote in cash since Feb. 1, 2013.
Using this administrative measure angered banks, which also have problems with customers. Despite the Central Bank's decision applies to the banks, they have to take a commission during the settlements with customers in case of giving 100 manat banknotes. Otherwise, they will have to give customers banknotes of small denomination in cash.
Although this factor [receiving cash in small denominations] must not bother clients, but some of them think that this is a violation of contracts, so the banks must solve this problem by reviewing the contracts, which is a waste of time.
In this regard, the banks either individually or through the banking community are holding the consultations with the Central Bank to remove this commission or at least reduce its amount.
The banks, knowing about the Central Bank's policy, which also has costs in the money supply governance (storage, printing new banknotes and utilization of old banknotes), believe that it would be reasonable to set a lower commission, for example, at 0.05 percent.
Before this decision, around 90 percent of the banks bought cash money by 100 manat banknotes from CBA. But now they take banknotes of small denomination to avoid unnecessary expenditure.
The banks hope that this commission will be eliminated, as there is common understanding of the situation during the consultations with the central bank.
CBA originally planned to set a similar commission for 50 manat banknotes, along with 100 manat banknotes, but it has not been set due to the efforts of banks.
The Central Bank justifies the decision by the necessity to optimize the nominal structure of banknotes, reduce using cash in calculations and promote the use of non-cash payment systems.
According to experts, tax incentives rather than administrative is the most effective measure in the international practice to increase the volume of cashless payments.
The share of cash payments in the turnover hits only 4-5 percent in Western countries, while in Azerbaijan the figure hits 50-60 percent.
This decision is not linked to the CBA recent statements about the plans to issue higher denomination banknotes of 200 manat. In this case, the CBA could face a similar problem [increasing demand for big currency]: banks and the public will buy 200 manat banknotes in connection with costs while buying 100 manat banknotes.
According to the CBA, the share of 100 manat banknotes in circulation has reached 75 percent for the last seven years, exceeding the internationally accepted standards.
The official exchange rate is 0,7847 AZN/USD on Feb. 23.