The announcement was made by SBV Deputy Governor Dao Minh Tu at a press meeting in Hanoi on January 12.
However, the central bank will still reserve a number of used banknotes for the VND500, VND1,000, VND2,000 and VND5,000 denominations that meet quality standards to fulfil demand during the Tet holiday, which is the largest traditional holiday for the Vietnamese, and will begin on February 8.
Bills of small face values, especially VND500 and VND1,000, 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 pray for luck in the New Year.
However, the central bank affirmed that it would still provide an amount of new bills with larger face values to meet rising demands during Tet.
This will be the fourth year that small banknotes of under VND5,000 denomination are not being printed and it has helped save some VND1.5 trillion (US$65.5 million) for the State budget, the central bank estimated.
Director of the SBV's Issue and Vault Department Nguyen Chi Thanh said that the policy has so far received a positive response from the public.
The central bank said it would also collaborate with other 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 VND40 million ($870 and $1,740).
In a bid to secure the supply of cash for Tet, the central bank has also asked its branches nationwide to instruct commercial banks to be well-prepared with enough cash to meet demands of individuals and organisations.
To ease foreign currency payment issues for foreign-invested firms, export-import firms, and those in industrial and processing and export zones during the Tet occasion, the SBV has asked commercial banks to make an advanced announcement and make plans to meet the payment requirement of firms.
The payment operation through the inter-bank system would also last for an extra hour from February 1 to February 5, to make it easy for people to conduct transactions.
The central bank also requires credit institutions, which have ATMs, to ensure that the demand for cash withdrawals is met.
Commercial banks and other institutions that are qualified for foreign currency exchange service would also operate normally to meet the exchange demand of tourists. —