Is Bangladesh Facing a Financial Crisis as Banks Halt New Currency Circulation?

Dhaka, April 28 (NationPress) Bangladesh is currently facing an economic crisis under the interim government led by Muhammad Yunus, as banks are struggling to circulate new currency notes necessary to fulfill the country's financial demands, local media reported on Monday.

This crisis escalated following the political transition after the removal of former Prime Minister Sheikh Hasina amid a violent uprising last year.

New currency notes are not entering the market as all forms of money and coins depict Bangabandhu Sheikh Mujibur Rahman, according to a report by the prominent Bangladeshi daily, Prothom Alo.

As a result, citizens are enduring financial hardships due to the unavailability of new notes. Both shops and banks are inundated with old, torn, and dirty currency notes.

Last month, the central bank mandated all scheduled banks to halt the exchange of fresh notes for the public.

In a directive issued by Bangladesh Bank, branches holding fresh notes were instructed to stop exchanging them and instead keep them in reserve.

Banks were recommended to conduct all cash transactions utilizing re-circulated notes. Since then, the circulation of new currency has completely ceased, leading to a significant shortage in the market, according to reports from local media.

"Millions of banknotes featuring Bangabandhu's image are still stored in various banks' vaults. The mint lacks the capacity to withdraw all notes simultaneously and print replacements. To alleviate the public's suffering, the notes that have already been printed should be circulated," stated Ziauddin Ahmed, former Managing Director of the Mint.

Reports indicate that following the Central Bank's directive against issuing previously printed notes, it has incurred substantial financial losses, with around 15,000 crore Bangladeshi taka of paper notes featuring the image of Sheikh Mujibur Rahman remaining unutilized.

Moreover, several anonymous officials from the central bank disclosed to Prothom Alo that this decision was made under high-level government instructions.

Other bank officials expressed to the newspaper that the abrupt halt has triggered a market crisis, leading to the waste of printed money and increasing customer hardship.

In addition, ATM booths in Bangladesh have also begun dispensing old and nearly unusable notes, further compounding customer difficulties.

"I withdrew 20,000 taka from an ATM using my Dhaka Bank card. Out of this amount, three 1,000 taka notes are almost unusable. Now, when I attempt to return these notes, the banks refuse to accept them," shared a customer.