Banknotes issued by the Central Bank of Egypt (CBE) increased in June by 13.09% of GDP, registering its highest level since June 2014, according a CBE report. The report explained that the CBE has issued currency worth EGP 314.885bn in June, compared to EGP 307.774bn in May, with an increase of EGP 7.111bn. The rate of banknote issuance reached about 15.06% of GDP in June 2014, marking its highest level in the last four years, while it registered its lowest level in November 2014 when it recorded 12.17% of GDP. According to the CBE, witnessed the issuance of EGP 200 banknotes worth EGP 155.98bn, EGP 100 banknotes worth EGP 114.574bn, and EGP 50 banknotes worth EGP 30.767bn, while the 25 piasters denominations were worth about EGP 159m only. The Banks and Credit Law No. 88 of 2003 had granted the CBE the right to issue banknotes and identify its denominations and specifications. The CBE decides with the government the currency amount to be issued, to suit the size of current economic activities and avoid inflation and price increases by excesses in the issuance of currency notes. On the other hand, a decrease in the issuance of currency notes may shrink economic activities and decrease growth rates. According to an earlier statement by the CBE, issuing banknotes is based on studies and analysis of macroeconomic variables. The report added that the CBE is keen on making the annual growth of banknote issuance in line with the annual average rate of GDP growth. That is in accordance with the customary economic principles. The CBE explained that it issues new banknotes to replace damaged ones, in order to maintain the civil level of the Egyptian currency. The CBE added that the issuance of currency notes is not related the state's budget deficit.
