The introduction of new currency notes in Maldives has always sparked debate and curiosity among the public. While many believe that printing money is solely for government needs and debt repayment, the Maldives Monetary Authority (MMA), the Central Bank of Maldives, has revealed that there are several economic, technical, and administrative reasons behind the issuance of new notes.
The MMA has the sole authority to issue, circulate, and manage cash in the country, as mandated by the Central Bank Act of Maldives.
As the economy grows, the central bank has a legal duty to ensure that the money supply keeps pace with increasing business transactions and demand for cash. With advancements in technology, the risk of counterfeiting has become a pressing concern. To mitigate this risk, the MMA has introduced new notes with cutting-edge security features, including color-changing lights, holograms, and special marks. The "Ran Dhihafaheh" series, made of polymer or plastic material, has been designed to be more durable and resistant to damage.
However, even these notes have a limited lifespan and can become worn out over time. According to MMA statistics, about 39 percent of MVR 100 notes are deteriorated beyond use every year. To maintain the integrity of the currency, it is essential to remove these damaged notes from circulation and replace them with new ones. This process is not an increase in the total money supply, but rather a replacement of damaged notes with new ones.
The MMA also issues new notes in response to market demand, ensuring that the circulation of notes is in line with the needs of the economy. For instance, during the month of Ramadan, the increased use of cash in small businesses leads to a shortage of MVR 20 notes, which are the most widely used denomination after MVR 100. By issuing new notes, the MMA facilitates economic activities and maintains confidence in the Maldivian rufiyaa (MVR).
Economists believe that the renewal of currency notes is a crucial step in sustaining economic vitality. The introduction of new notes with advanced security features, replacement of deteriorated notes, and circulation of notes in line with market demand all contribute to maintaining the safety and stability of the currency.
As the Maldives continues to grow economically, the MMA's efforts to manage the money supply will play a vital role in facilitating business transactions and maintaining confidence in the MVR.