(Bloomberg) -- South African Reserve Bank Governor Lesetja Kganyago unveiled upgraded banknotes that will incorporate enhanced security features, including color-changing ink, to prevent counterfeiting.
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Countries lose a fortune to counterfeiting each year and the practice “tarnishes the credibility of the currency, thereby impacting negatively on the growth of an economy,” Kganyago said at an event hosted by the Nelson Mandela Foundation in Johannesburg on Wednesday.
The new notes, which will enter into circulation from May 4, will retain the image of Mandela, the nation’s first democratically elected president who died almost a decade ago.
Africa’s so-called Big Five wild animals — rhino, elephant, lion, buffalo and leopard — which respectively adorn the backs of 10 rand ($0.55), 20 rand, 50 rand, 100 rand and 200 rand bills, will now be depicted with their young on the banknotes, with the image varying by denomination.
The notes will also be rolled out to Namibia, Eswatini and Lesotho that are in a common monetary area with South Africa and where the rand is considered legal tender alongside their own currencies, said Fundi Tshazibana, a deputy central bank governor.
South African banknotes are refreshed every six to eight years and coins every 20 to 30 years in line with international best practice to combat copying, the governor said. The existing notes bearing Mandela’s image were issued 11 years ago, while a commemorative series was printed in 2018.
The current coins were released in 1989. New ones, showing the country’s fauna and flora, are also being introduced.
Without changes, “not only is there a risk that the public could lose confidence in the currency but there is a greater risk that substantial counterfeiting could generate an increase in the supply of money, thereby causing inflation,” Deputy Finance Minister David Masondo said at the same event.
Policymakers have raised interest rates by 425 basis points since November 2021 to cool inflation that at 7.1% remains above the 4.5% midpoint of the target range at which the central bank prefers to anchor price-growth expectations.
The bank said in its six-monthly Monetary Policy Review last week that it sees risks to inflation from food and core price growth that have yet to peak, in part reflecting the effect of a weaker rand. The unit has depreciated almost 7% against the dollar the year, making it the second-worst performer in a basket of 16 major currencies tracked by Bloomberg.
“These upgrades are an important development in reducing the potential cost of counterfeiting and preserving the integrity of the rand,” Masondo said.
(Updates with comment from central bank governor in second paragraph)
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