In an effort to address the accumulation of old-design U.S. dollar banknotes in the domestic financial system, the National Bank of Kazakhstan (NBK) has been actively purchasing these banknotes from second-tier banks (STBs) since 2024. This initiative was launched as a temporary measure to facilitate the removal of outdated U.S. dollar bills from circulation and ensure their efficient disposal abroad, DKnews.kz reports.
Background and Initial Implementation
Throughout 2024, the NBK engaged in transactions with local banks to acquire old U.S. dollar banknotes that were no longer in demand. The purchased banknotes were subsequently exported to international financial institutions. The commission fee for these transactions was determined based on market quotations from foreign counterparties, ensuring a fair and transparent valuation of the process.
By the end of last year, the NBK successfully executed the export of $48 million worth of such banknotes, thereby alleviating the burden of outdated cash holdings on Kazakhstan’s banking system.
Direct Agreement with the U.S. Federal Reserve
A significant milestone was reached when the NBK secured a direct agreement with the U.S. Federal Reserve System (FRS) for the acceptance of old-design U.S. dollar banknotes. This breakthrough has significantly optimized operational costs, reducing expenses related to transportation, insurance, and other associated logistical costs.
As a result of this agreement, the commission fee for such transactions has been reduced to 0.3%, making the process more cost-effective for all parties involved. This reduction in fees not only benefits the NBK but also eases the financial burden on Kazakhstan’s second-tier banks, which were previously constrained by the accumulation of outdated U.S. dollar banknotes.
Future Outlook
The NBK has confirmed that it will continue these operations as a temporary measure, responding to specific requests from STBs that face difficulties in managing old-design U.S. dollar cash reserves. By maintaining this initiative, the NBK aims to ensure smooth financial transactions within the banking sector while mitigating the risks associated with the accumulation of obsolete foreign currency notes.
The direct agreement with the FRS underscores the growing efficiency of Kazakhstan’s financial operations on the international stage. Moving forward, the National Bank remains committed to optimizing its processes to support the stability and liquidity of the country’s banking sector.
