ISLAMABAD: On Monday, the Senate has passed a resolution for taking 5,000 notes out of circulation as India has made the high-denomination bank notes obsolete last month to control take evasion and corruption.
The resolution called upon the government to demonetize the high denomination bank notes “in order to reduce illicit money flow, encourage the use of bank accounts and reduce the size of undocumented economy”.
Senator Safiullah suggested that the most illicit transactions are carried out using the Rs. 5000 notes and requested the government not to do as India did.
Further he gave suggestion that government should stop printing the high denomination notes and gradually pull them out of circulation in the period of 3 to 5 years.
Senator Zahid Hamid, Federal Minister for Law and Justice Senator Zahid Hamid, was strongly against the resolution and said around Rs. 3.431 trillion worth of Rs. 5000 notes are in circulation in the country.
Moreover, he said, the Rs. 5000 bank note comprise the 30 percent of the total currency in Pakistan.
Taking out such a large proportion of high value notes from the circulation may cause monetary crises and make people to give preference foreign currency over local currency because of supply, as a single note of dollar posseses double the value of Rs. 5000 note.
The resolution was passed by the House with majority vote.