China to destroy banknotes from coronavirus-hit sectors

Karen Yeung, South China Morning Post

Posted at Feb 17 2020 08:27 AM

China to destroy banknotes from coronavirus-hit sectors 1
A staff member wearing a face mask arranges stacks of Chinese yuan banknotes at a bank in Nantong, Jiangsu province, China Jan. 30, 2020. China Daily via Reuters

The Guangzhou branch of China’s central bank said it would destroy all banknotes collected by hospitals, wet markets and buses to ensure the safety of cash transactions as the country battles a coronavirus epidemic.

Financial news outlet Caixin reported on Saturday that officials at the People’s Bank of China’s (PBOC) branch in the southern city ordered that all paper currency from sectors with high exposure to the coronavirus be withdrawn for destruction.

Commercial banks in the province should put banknotes from these sectors aside, disinfect them and hand them in to the PBOC.

The order comes after Fan Yifei, deputy governor of the central bank, said on Saturday that 600 billion yuan ($85.6 billion) of new banknotes had been distributed throughout the country since Jan. 17, including 4 billion yuan in fresh notes sent to Wuhan at the center of the outbreak before the Lunar New Year.

The central bank said that in general it would use high temperatures or ultraviolet light to disinfect cash, and store the currency for more than 14 days before putting it back in circulation.

Nearly 3 billion yuan in new banknotes was injected into the southern province of Guangdong, excluding Shenzhen, between Feb. 3 and 13, while 7.8 billion yuan was withdrawn from circulation, the PBOC said.

The banking industry extended 270 million yuan in cash through 1,249 transactions to government agencies, epidemic prevention and control related enterprises and other frontline units, Caixin reported. Cash withdrawals amounted to 800 million yuan through 6,186 transactions.

Central banks routinely collect and destroy old coins and banknotes in exchange for new ones. This does not affect the money supply, and is done to maintain a healthy amount of usable currency.

Caixin cited an unnamed deputy chief at a large joint stock bank in Guangzhou as saying that customers would be required to confirm the origin of the banknotes being deposited at their branches but in reality, “it would be difficult for such a measure to be completely effective”.

Fan also said that China had pledged extra funds to banks, prodding them to help manufacturers and businesses pull through headwinds from the China-US trade war and the nation’s worst health crisis in nearly two decades.

Economic growth, which already slowed to 6 percent in the fourth quarter, is likely to sputter further in the three months ending in March, with an estimated 50 million workers forced to stay home since late January, disrupting production of everything from clothing to toys and crucial components.

The State Administration of Foreign Exchange said it had help fast-track 1,370 foreign exchange transactions in China between January 27 and February 12, including 70 for imports into Hubei, mainly for the purchase of masks, protective gear and production materials.

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