The State Bank of Viet Nam does not plan to issue new banknotes with denominations lower than VND5,000 (23 US cents) for the Tet (Lunar New Year) holiday, to cut costs.

The announcement was made by SBV Deputy Governor Dao Minh Tu at a press meeting in Ha Noi yesterday.

However, the central bank will still reserve a number of used banknotes for the VND500, VND1,000, VND2,000 and VND5,000 denominations that still meet quality standards to fulfil demand during the Tet holiday, which is the largest traditional holiday for the Vietnamese and will begin on February 19.

Currently, bills with small face values are mainly used as donation money, and not as a means of payment. As a Tet tradition, Vietnamese usually donate money in small denominations to pagodas and temples to wish for luck in the new year.

This will be the first year that new banknotes of the VND5,000 denomination are not printed and it will help save some VND171 billion ($7.99 million) for the State budget, the central bank estimated.

The central bank has not issued new small banknotes of VND500, VND1,000 and VND2,000 denomination since 2013, which has helped save roughly VND503 billion ($23.5 million) for the State budget, Tu said, adding that the policy has so far been received positively by the public.

Tu said the State Bank of Viet Nam will collaborate with relevant ministries and agencies to better manage note exchange services. According to a current regulation, illegal note exchange services can be fined between VND20 and 40 million ($934 and 1,869).

In a bid to secure the supply of cash for Tet, the central bank has already instructed its branches nationwide to review cash demand and ensure that the branches are well-prepared, with enough cash to supply the local State treasuries and credit institutions.

The central bank also requires credit institutions, which have ATMs, to ensure that demand for cash withdrawals is met. 

VNS