Bangladesh is struggling with a crippling economic crisis after a shortage of currency, prompted by a government move to reissue banknotes, hampers daily activity. The government, led by interim Prime Minister Muhammad Yunus, has suspended the circulation of existing notes featuring the face of Sheikh Mujibur Rahman, the architect of Bangladesh. This move has rendered banks short of cash to respond to demand from the public and has generated widespread anxiety among the public and the business community.
Why Bangladesh Is Running Short of Taka
The crisis arises at present due to the order issued by the caretaker government calling for all the banknotes featuring Mujibur Rahman to be scrapped and new issues printed with a different design. In December of last year, local press noted that the new notes were supposed to feature religious buildings, Bangladeshi heritage, and symbols of the July revolt—the protests which eventually resulted in the removal of Prime Minister Sheikh Hasina. It was universally taken as a decision aimed at defaming Rahman’s legacy.
Prothom Alo, a leading Bangladeshi daily newspaper, wrote that last month, the interim government ordered the central bank to stop printing existing currency featuring Rahman’s image. The move has led to a serious currency shortage throughout the country.
Mint Capacity Falls Short, Causing Market Chaos
Ziauddin Ahmed, former managing director of Security Printing Corporation and executive director of Bangladesh Bank, was concerned about the move. Millions of banknotes carrying Bangabandhu’s photo are still sitting in the vaults of different banks. The mint cannot cancel all the notes simultaneously and print new ones. For lessening the pain of the people, the printed notes should be let out into the market,” he added.
The scenario has resulted in about 15,000 crore taka value of printed but unreleased notes being trapped, increasing the liquidity crisis. To make matters worse, a large number of the old notes that are currently in circulation are damaged or nearly unusable.
Earlier, new retail notes could be brought from the bank every week. That has stopped since last month. Most of the old notes that are being received from the bank are torn. If these notes are provided to the customers, they don’t want to accept them,” store manager Maqbul Hossain said.
Printing of New Notes Yet to Begin
Adding to the crisis is the lag in printing the new notes. The mint will only start the process in May, with the 20, 50, and 1,000 taka denominations, reports say. The low printing capacity of Bangladesh’s Security Printing Corporation, which can print only three denominations at a time, adds to the delay.
Bangabandhu’s picture notes cannot be withdrawn abruptly. In this case, to minimize the people’s suffering, the already printed notes should be circulated in the market. When new design notes enter the market, the old notes should be phased out gradually,” said Ziauddin Ahmed.
Bangladesh Bank data indicate a yearly requirement of 1.5 billion new notes of different denominations, whereas the existing capacity of the mint is 1.2 billion. During the 2023–24 fiscal year, only 1.05 billion new notes were produced—far short of the needed amount. Officials now believe it will take five to seven years to completely withdraw the old notes once new ones begin circulating.
Public Anger Mounts Over Torn, Dirty Notes
As banks and ATMs keep spewing out worn-out bills, public frustration is increasing. People are being compelled to use currency that is either barely readable or physically damaged.
Shafiul Alam, a staff member at a private organisation, told Prothom Alo about his recent experience. Having bought a product of 420 taka, the vendor offered him change in different denominations. “Of them, one 200 taka note and two 20 taka notes were almost unusable,” he stated. The vendor promised Alam to replace the worn-out currency next month, leaving him with no option in hand.
The customers are also being affected. “I withdrew 20,000 taka from One Bank ATM. Among these, three 1,000 taka notes are nearly unusable. Now even if I attempt to exchange these notes, the banks refuse to accept them,” said another victimized customer Ajmal Hossain.
Bangladesh in Financial Limbo
The inability to circulate fresh notes or even reissue old usable currency has resulted in general monetary instability in Bangladesh. Although the interim government’s intentions may be to reconstitute national identity, the timing and manner have unleashed havoc in an already weak economy.
Until new notes printing and circulation stabilize, Bangladeshis will continue to face financial hardships resulting from the currency shortage. Experts say that unless interim governments reverse the decision or put the held notes temporarily into circulation, the currency crisis may worsen, affecting trade, daily transactions, and public confidence in the banking system.
