RBV Governor Warns Against Unauthorized Commemorative Banknote, Stresses Legal Compliance

September 11, 2024 4:27 am | Posted in Business News | Share now Twitter Facebook

By Doddy Morris

The Governor of the Reserve Bank of Vanuatu (RBV), August Letlet, has addressed recent concerns regarding the issuance of a commemorative banknote, stressing that such initiatives must strictly follow the RBV’s protocols.

Earlier in August, when media reported on a potential commemorative note featuring a foreign leader, then Minister of Finance John Salong stated that the purported initiative was neither political nor a ministerial decision and that it falls under the RBV’s jurisdiction to issue such a banknote. If authorised, it would not be the first time this has occurred.

Discussions and disagreements have flooded social media regarding this initiative. However, according to the RBV Governor, they were unaware of the initiative when the sample draft design was signed by the Ministry of Foreign Affairs. A photo circulating on social media showed the Minister responsible for Foreign Affairs and Deputy Prime Minister (DPM), Matai Seremaiah, and Member of Parliament (MP) Jessy Luo posing with the design draft, without the knowledge or involvement of the RBV.

Governor Letlet stated that the printing of commemorative banknotes or coins is not unusual but must be conducted under the direct oversight of the RBV. He clarified that the process involves formal agreements, often with international companies, such as a prior engagement with a German firm to print such notes.

“The process must originate from the Reserve Bank, not from any other entity or agency,” the Governor emphasised.

He also explained the concept of seigniorage, which refers to the revenue generated from the issuance of currency, emphasising that this belongs to the RBV.

“The money collected must come to the Reserve Bank, possibly reaching the government through dividends at a later stage,” he noted.

Despite rumours suggesting the government sought to raise funds through a commemorative note initiative, Governor Letlet addressed these as misinterpretations. He revealed that in discussions with the Deputy Prime Minister, Minister of Foreign Affairs, and former Minister of Finance, the RBV made it clear that any such process initiated outside the RBV’s mandate is unlawful.

The Governor referenced Section 17 of the RBV Act, which outlines penalties for unauthorised currency issuance, including potential jail time of up to seven years.

“We have been very clear in our meetings that the process must stop, and if we find evidence of illegal printing or distribution, we will enforce the law,” Letlet warned.

The RBV has yet to receive any further developments on this issue following its public notice and official communication to the Deputy Prime Minister. However, Governor Letlet reiterated the RBV’s commitment to ensuring compliance with the legal framework governing the nation’s currency.

Meanwhile, the first Speaker of Parliament and a former Prime Minister, Maxime Carlot Korman, stated in a press statement that there are concerns about this proposal. He said featuring a foreign leader on Vanuatu’s currency might be seen as compromising national sovereignty and identity.

“Public reaction could range from discontent over perceived excessive alignment with China to concerns about undermining national pride,” the 83-year-old veteran politician stated.

“There is a risk that this proposal could lead to a blatant breach of the Reserve Bank Act. Furthermore, the decision could impact Vanuatu’s diplomatic relations with other key regional partners, such as Australia and New Zealand.

“The government must carefully weigh these considerations to ensure that any decision supports national interests while fostering beneficial international relationships.”

The Vanuatu Daily Post made attempts to get a comment from DPM Seremaiah, but he declined to comment, stating the issue has been resolved.