On a
final note, Nepal's monarchy By
Dhruba Adhikary
KATHMANDU - Remnants of
Nepal's monarchy are fading away with banknotes
bearing the image of the last king, Gyanendra
Shah, to be withdrawn from circulation. The Shah
dynasty had ruled for 240 years as the world's
last Hindu royal family before being abolished in
2008.
The country's central banking
authority, Nepal Rastra Bank, announced last
August that currency featuring pictures of
Gyanendra would be replaced with images of
Sagarmatha, or Mount Everest. Starting Tuesday, all
banks will collect currency notes with the king's
picture and replace them with new ones.
The decision to remove the king's image
and royal insignia from banknotes was a political
one, taken by the government formed after the 2006
revolt that heralded the nation's birth as a
republic. However, the central bank has only been
able to phase out the
notes gradually, and by
January some 28 billion of the 160 billion rupees
in circulation still bore the royal seal. This
figure is now estimated at around 10 billion
(US$140 million).
Only commercial banks
that hold government accounts are allowed to
collect the old notes. "The central bank will
withdraw around 10 billion [Nepali rupees]
currency notes with the former king’s portrait
from circulation by mid-March," Gopal Kafle,
deputy governor of the central bank, told the
Himalaya Times.
"What is important to
understand is that none of the banknotes or coins
are being demonetized," Ashwini Kumar Thakur, head
of the central bank's currency management
department, said in an interview with Asia Times
Online. The bank had said that after March 15,
people ignoring its call to replace banknotes
would need to approach 75 designated bank
counters.
Mysteriously, as the central
bank began to implement the measure, pro-monarchy
graffiti started to appear at its headquarters.
"Let's convene a round-table conference with
participants including the former king," said one
of the slogans. Perhaps the chaos and instability
since the uprising has sparked nostalgia for the
Shah dynasty, which had reigned for 240 years.
Almost all new banknotes since 2006 have
had images of Sagarmatha, which as the world's
highest mountain is one of the country's most
prized possessions. The central bank has defended
the time-scale needed to phase out the old
currency, citing cases where monetary change has
been even slower. One example is the island nation
of Fiji, independent from colonial Britain since
1970, which has only now chosen flora and fauna to
replace Queen Elizabeth II's portrait.
In
2007, there were difficulties with changes to
1,000 rupee notes, with the images of the national
flower, Rhododendron, superimposed at the last
minute over a royal watermark. The timely measure
helped save 90 million rupees in currency just
ahead of the 2008 national elections, when
campaigning parties were in dire need of cash.
India, the United Kingdom and France are
some of the other countries where Nepali banknotes
are printed. An Australian printer provided
Nepal's first polymer (plastic) banknotes - of
10-rupee denomination, with a durability said to
be three times higher than that of paper currency.
Records show that all monetary
transactions in Nepal until 1945 were conducted
only in coins, which often required stakeholders
to employ ponies and porters to cover distances.
Elderly people also recall the time when wealthy
rulers, from the Rana clan, used to weigh bags of
coins at great gambling events. The gamblers did
not have patience to count heavy silver coins,
priced at half a rupee or one rupee. The arrival
of paper money, in September 1945, apparently
offered great relief to them.
The first
paper notes, issued by the State Treasury - the
forerunner of present-day Ministry of Finance -
bore a portrait of Gyanendra's grandfather, king
Tribhuvan.
Tribhuvan's son, king Mahendra,
set up the country's central bank in 1955 and it
has been the sole regulator of the banking system
since then. Mahendra was succeeded by his eldest
son, Birendra, in 1972 but he, his queen and the
crown prince were killed in the infamous palace
massacre of 2001. This saw his surviving brother,
Gyanendra, ascend to the throne.
The
Finance Ministry has said replacing the old
currency is also intended to prevent hoarding,
with officials blaming a cash, or liquidity crunch
in recent years on wealthy Nepalis keeping bundles
of banknotes in homes in large sacks and rented
lockers. The hoarding was a result of
declining public confidence in banks after a
Maoist-led government took charge in August 2008.
The radical economic agenda it pushed through made
the community of traders and industrialists
jittery, and sent ominous signals to the public at
large, with some investors shifting their funds
elsewhere.
The liquidity crisis, which has
eased a bit now, became a source of profound
embarrassment to the authorities when the central
bank resorted to issuing Indian currency notes to
domestic customers, sparking a public uproar.
With the incumbent government, headed by
Prime Minister Jhalanath Khanal, still dependent
on the political support of the Maoist party, few
expect the central bank's latest maneuver to
improve the liquidity problem. Only political
stability can rehabilitate the confidence of the
public and investors, and this will need political
commitment and solidarity that's more than just
paper-thin.
Dhruba Adhikary is a
Kathmandu-based journalist.
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