After the historic GE14 win, our new government (Pakatan Harapan) has promised to combat corruption as clearly, it has tainted the sanctity of this country.
Staying true to their promise, Tun Dr Mahathir said that the government may change our bank notes or opt for cashless transactions in efforts to eradicate corruption.
Based on a recent statement yesterday (26 June 2018), Tun M shared that these are ideas to curb corruption and “address counterfeit notes” that have circulated all over the country, reported NST.
Reports reveal that these efforts may be inspired by Modi’s move to ban India’s INR 500 and INR 1,000 (RM29.40 and RM58.82) notes overnight to combat the rapid growth of “untaxed cash transactions”. This was a smart move as Modi managed to disrupt the black market because they weren’t able to transfer their money openly and were no longer accepted as “legal tender”.
FYI, “untaxed cash transactions” contribute to corruption, funding of terrorist groups and wide distribution of imitation currencies. Yikes, no wonder he banned the notes!
Besides the change of bank notes, Tun M is also considering to battle corruption by possibly enforcing cashless transactions only.
“We are studying how best to reduce corruption and how best to keep track of money that is being spent, especially by the government,” he said.
He pinned down these possible ways because Tun M believes that the change of currencies could fight one of the “biggest legacies of the old administration”. Do you agree with him?
Tun M explained,
“(But) it’s not an easy thing because when you want to replace currency, you must know how much currency is in circulation… because we have to replace what is in circulation and that is a very big amount.”
Meanwhile, Ambank group chief economist and head of research Dr Anthony Dass thinks that Tun M’s ideas could be a “costly exercise” because it involves complex processes.
“New ones must be printed, though these would likely be based on the old notes.”
“They will need special papers, millions of metres of security thread, watermarks, ultra-violet features and other anti-counterfeiting devices,” he explained.
Dass also noted that the change of currency could leave a negative impression on stakeholders as they could lose their trust and confidence in our government.
“Although countries can, and sometimes, do change the shape and size of their currency notes, and even denominations, often, the old notes are allowed to remain in circulation,” he said before suggesting that the government adopt a parallel currency.
FYI, parallel currency is currency issued as a secondary currency by the government alongside the official medium of payment recognised by the law.
Dass had suggested to run it along with the old currencies to pay taxes, food and clothing. Therefore, this will allow the new currency to pay the debts, which will lead to our economic growth.
On the other hand, interestingly, Sunway University Business School economics professor Dr Yeah Kim Leng said that Tun M could have meant that the government will be replacing expensive foreign currency debts – such as 1MDB that’s denominated in dollar – with cheaper loans or debt securities issued in different currencies, like the Yen from Japan.
He was quoted as saying,
“By lowering the debt-servicing burden, it will strengthen the country’s fiscal position. Reducing exposure to a particular currency would also help to diversify currency risks, especially if the foreign currency had a strong likelihood of appreciation, making the loans more expensive to service in the future.”
“A reduction in fiscal risk and an improvement in debt management will raise investor confidence, thereby shielding the currency from undue depreciation pressures.”
“Lower debt servicing also means that the government can allocate more resources to spending, that in turn will boost the country’s growth, thereby lending support to the currency value.”
Hence, to ensure that corruption is removed by the root, our government may decide to go cashless or change the currency notes. Whichever they choose, we hope it would benefit the country immensely!
Would you rather go cashless or have new currency notes? Let us know in the comments below!
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