South African Reserve Bank speaks on the introduction of R500 note

As South Africans grapple with the rising cost of inflation and increased cost of living, there has been a growing debate on whether the country should consider higher denominations of coins and notes.

The South African Reserve Bank told BusinessTech that it is constantly doing research to determine whether to transition into the higher denomination coin. This includes a R10 and introducing higher denomination banknotes such as R500, it said.

"The results of the (latest) study revealed that South Africa is not ready for a R500 banknote and some of the reasons stipulated were that the introduction is only valid when the highest denomination, R200 in our case, is the most circulated banknote.

"This is however not the case in South Africa as the R100 denomination is the most circulating banknote. The other reason is whether the R200 is still used as a store of value – which it is – and therefore does not warrant a change," the bank said.

The Reserve Bank's study found that there is an economic case for introducing a R10 coin - however, there is no appetite from the public to introduce this coin, it said.

In determining whether or not to transition to new denominations, the SARB considers the buying power of the rand, the general trend of inflation, and public perception.

Data published at the end of 2021 shows that, in terms of volume, the R100 denomination is the most popular with an average of 776.6 million physical banknotes in circulation outside of the SARB between March 2020 and June 2021.

This was followed by the R200 denomination, with an average of 307.3 million banknotes circulating during the same period.

"Most of the other denominations of banknotes in issue remained relatively stable during this period, while the number of coins in circulation outside of the SARB by far exceeded those of banknotes, owing to the range of small denominations," the central bank said.