Azerbaijani Central Bank considers issuing coins with a nominal value AZN 1

Business Materials 18 July 2013 18:06 (UTC +04:00)

Azerbaijan, Baku, July 18 / Trend, A. Akhundov /

The Central Bank of Azerbaijan (CBA) continues to weigh issuing coins with a nominal value AZN 1, Deputy Director of Cash Department of CBA Hajibaba Masimov told journalists. On July 18, the CBA held an "Open Door Day" for the mass media.

According to him, the CBA began to explore this possibility even before the denomination process. However, there are circumstances that make it undesirable to issue coins. "For instance, there may be logistical problems, i.e. difficulties with the collection and transportation of a large number of coins.

This also increases the risks of counterfeiting. Coins are more vulnerable to forgery as they are easier to duplicate. In addition, considering their low nominal value, the population does not report counterfeited coins and allows them to stay in circulation. For example, the volume of counterfeit coins with a nominal value of 1-2 Euros increases in Europe, which causes economic problems. Another significant factor is complexities which arise from social payments. If coins with a nominal value of AZN 1 are put into circulation, pensioners for example will be unable to withdraw sums up to 4 manat, excess will remain in accounts", Masimov said.

In Azerbaijan, because of new currency denominations (in 2007 a full transition to a new price scale took place), all old banknotes were replaced with new ones minted before December 31, 2006. Since 2007, Azerbaijan has used only new banknotes as means of payment, this allows the prevention of difficulties, which could have appeared for trade and economic actors in connection with the conversion of banknotes of 19 denominations immediately.

The total scale of the new currency order is 1.7 billion manats with reserves for 3 years. Of the total funds, 94 per cent are banknotes (1,5,10, 20, 50 and 100 manats) and six per cent are metal coins (1,3 5, 10, 20, 50 gepik).

Banknotes will be left in circulation for 3-5 years, and of coins for 20.

Nowadays, the most frequentl replaced banknotes are 1 and 5 manat bills. Their life cycle is 1.5-2 years, as they are more quickly defaced because of their frequent use. That is why in order to reduce their loads and reduce their cost, the CBA is considering issuing metal coins of larger denominations.