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Thursday, 26 May 2016

Egypt reissues EGP 1, EGP 0.50, EGP 0.25 banknotes

A “change” crisis? The CBE has reissued the EGP 1 banknotes and governor Tarek Amer told Al Ahram there will be EGP 500 mn worth of them in circulation by the beginning of Ramadan. EGP 1 banknotes were discontinued and removed from circulation in 2007 and were replaced with coins. For our young readers and those who haven’t been in Egypt long enough to come across it, this is what an EGP 1 note looked like. Al Mal says a number of freshly-printed banknotes dated 2002-2003 were available in a number of stores. One retailer said the stock of change he received from the CBE was entirely made up of EGP 1 banknotes, with sources telling him higher minting costs are driving the switch to banknotes. This is a bit dubious as the EGP 1 coin, according to Wikipedia, has a bimetallic structure, with the outer ring made of 94% steel, 2% copper, and 4% nickel plating, whereas its centre is 94% steel, 2% copper, and 4% copper plating. Most recent CBE data does not indicate a reduction in issuing EGP 1 coins and all three metals used in minting it have experienced significant price drops in the past year, which, if anything, should result in higher seigniorage profits to the central bank — unless the central bank is just looking to expand its seigniorage profits. Amer had reportedly announced that the CBE was exploring the move back in February, according to Al Mal.

The CBE has also approved reissuing the EGP 0.25 and EGP 0.50 notes, Al Mal reports. There is no word as to the fate of the EGP 0.10 note, popularly referred to as Monopoly Money.

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