In a letter sent to banks as part of the fight against inflation, the Central Bank asked banks to stock small-denomination banknotes in ATMs instead of 200 TL notes.
In the letter, which was reported on social media, the CBRT asked banks not to include 200 TL notes in ATMs and to include more small-denomination banknotes so that they are more accessible.
The letter linked this request to inflation and included the following statements:
“As is known, ensuring that Turkish lira banknotes in circulation are in circulation in a clean and balanced composition is among the essential duties of our Bank. In addition, within the scope of the fight against inflation, it is important to shape the issuance policy within an analytical framework based on all the factors affecting price stability and the interaction of these factors. Accordingly, the effect of the denomination distribution balance in the market on inflation expectations is also being closely monitored.
In order for shopping and payments made in cash to continue easily, quickly and without interruption, low-denomination banknotes (5 TL, 10 TL, 20 TL) need to be put into circulation in sufficient quantities, and this is only possible with the contribution and cooperation of the banking system. In this context, in cash withdrawals made from our Bank, increasing the demand for small-denomination banknotes, not including 200 TL notes in ATMs, which are among the channels through which households access cash directly, and including more of these banknotes so that small-denomination banknotes are accessible will contribute to our Bank's policies.
We kindly ask that the necessary sensitivity be shown on this matter and that it be communicated to your bank's cash operations units and branches.”
Considering the statements, I think this is a recommendation rather than a requirement.
I would like to point out a few issues that crossed my mind below.
- If customers deposit 200 TL notes, these notes cannot be dispensed from the recycler unit, so they will be put into the reject bin. This will cause a significant amount of money to sit idle.
- ATMs have a capacity to hold a certain number of banknotes. Since lower-denomination banknotes will be loaded in ATMs instead of 200 TL notes, the cash replenishment frequency of ATMs will increase. This will place a serious burden on banks.
- From the customers' perspective, a withdrawal above a certain amount will leave the wallet looking stuffed full. Whether that is good or bad is up to you :)
In short, although I have question marks in my mind about why the decision was taken, it would not be appropriate to comment early without living through it and observing the consequences of the decision.
