NEW 100K DRAM PUT IN CIRCULATION

Asbarez
8/24/new-100k-dram-put-in-circulation/
Aug 24, 2009

YEREVAN (RFE/RL)-The Armenian Central Bank on Monday introduced a
100,000 dram currency note.

A representative of Armenia’s Central Bank (CB) has ruled out that
the introduction of a 100K Dram banknote on Monday increases inflation
risks or forestalls an imminent devaluation of the national currency
in Armenia.

CB Board member Vakhtang Abrahamian told RFE/RL that the regulator’s
specialists had studied the issue and concluded that the introduction
of this large banknote, equivalent to roughly $265, does not threaten
any major devaluation of the national currency.

Until now, a 50K Dram bill was Armenia’s banknote with the highest
face value.

"This banknote, according to our estimations, will take only 3 percent
in cash circulation on the market, which cannot have any significant
impact on the economy in terms of the value of the national currency
or any inflation risks," said Abrahamian.

Abrahamian said CB experts had studied the experience of a number of
countries, such as Lithuania, where the highest nominal value of a
banknote is equivalent to 1,000 Euros (approx. $1,433).

"This experience shows that on the contrary it facilitates large
transactions and avoids situations where large transactions are
carried out with the use of foreign currencies," he added.

Former CB chairman Bagrat Asatrian also ruled out that the introduction
of 100K Dram banknotes would have any impact on the value of the
Armenian currency. He said it would only alter the structure of the
money supply rather than expand it.

"I think there is also something positive here, and eventually large
banknotes are also a means to combat dollarization," said Asatrian.