Last month, Laos introduced a new 100,000 kip (US$12.45) banknote and released memorial gold and silver coins to commemorate the 450th anniversary of its capital, Vientiane, and the 35th anniversary of the establishment of the Lao People's Democratic Republic. Meanwhile, the Philippines which elected a new president last May unveiled the new designs of its six banknote denominations two weeks ago.
News about the new banknotes has excited the citizens of the two South-east Asian nations who were curious to see the new designs of the currency notes. Indeed, the issuance of a new banknote design may be warranted. In the case of the Philippines, the last time that it overhauled the design of its banknotes was 25 years ago. But the release of the new banknotes in both Laos and the Philippines was also met with criticism and skepticism, especially among economic experts.
Perhaps the Lao government thinks that making the people use a higher denomination banknote also makes them feel richer or that the government is doing something to solve the seemingly eternal cash problem in the country. But economists are worried about the impact of the 100,000 kip banknote on the country’s inflation rate. Responding to this concern, the Lao government has assured the public and the global community that the total amount of money in circulation would remain unchanged.
This is comforting to hear but it doesn’t solve potential practical problems once the higher denomination banknote enters general circulation. For example, traders might be forced to charge higher prices to avoid having to provide small change. Market transactions in the remote countryside might become complicated if consumers would start using the 100,000 kip currency note.
Fortunately for the Philippines, its highest denomination banknote is only 1,000 pesos. But experts immediately detected errors in the new banknote designs. They pointed out the geographical errors in the 500 peso and 1,000 peso bills which featured some of the tourist attractions and natural wonders in the Philippines. They also added that the Blue-Naped Parrot in the 500 peso bill is not accurately depicted (beak should be red not yellow, and tail should be yellow, not green) and the scientific names of native animals are not properly presented (they should be italicized).
The new currency designs also reflect the changing political dynamics inside Laos and the Philippines. The 100,000 kip note features the statue of King Setthathilat in front of the That Luang, Frangipani flowers, and Ho Phra Keo temple in Vientiane. It seems the government wanted the new currency design to represent Lao’s Buddhist ethnic heritage. Gone are references to the communist past of Laos. Just 20 years ago, Lao currency notes were full of socialist icons and its coat-of-arms reflected the red star, hammer and sickle.
Politics is also evident in the new banknotes of the Philippines. The face of former Philippine President Gloria Arroyo was removed in the 200 peso bill and it was replaced by a Tarsier, one of the smallest primates in the world. Meanwhile, the parents of President Noynoy Aquino are featured in the 500 peso bill. Historians are also asking why an American General during World War II was featured in the 50 peso bill which could make young people think that it was the Americans who liberated the Filipinos during the war.
It is expected that the currency debate will continue for some time but the governments of Laos and the Philippines should not forget that their long term aim is not merely to change money symbols but to increase the purchasing power of their citizens.