The kwacha is the currency of Malawi Explained
Ashly Chole Senior Finance Researcher
The kwacha is the currency of Malawi Table of Contents
The kwacha is the currency of Malawi
Malawi's kwacha, which serves as the country's sole legal currency, was first adopted in 1971. It was divisible into 100 cents, and 1, 5, and 20-cent banknotes were printed. During the course of a short period of time, another 50 new notes were issued to this series, replacing earlier denominations that ranged in value from 25 to 50 shillings a piece.
There are 1, 2, 5, and 10-cent coins available
One, two, five, and ten-cent coins are available. Due to its own capability for coin production, the government of Malawi is issuing these coins. The kwacha's golden color is a result of its composition, which includes copper, nickel, and brass. The coin has holes on both sides and is 13 mm in diameter, so that it may be strung on a necklace or bracelet without losing any value. Since then, the Central Bank of Malawi (CBoM) has been churning out these coins, and it is also in charge of distributing them across the national economy. They came in denominations of 5, 10, and 25 cents when the first coins were released in February 1965.
The initial coins had values of 5, 10, and 25 cena when they were released. With a face value of 100 cents (US$0.30), the original kwacha coins were bronze in composition. Afterwards, the government said that it would cut the size and weight of these coins in half and make them 50% lighter so that people would be more inclined to carry them in their pockets or wallets.
The original copper-nickel 50-cent kwacha coins
The new coins, which were composed of copper and nickel and had a face value of 50 cents, weighed half as much and were half as large. The original copper-nickel 50-cent kwacha coins weighed half as much, had a 50-cent face value, and were composed of that material. The new coins had a lower diameter (17 mm as opposed to 19 mm) and were also lighter. The Malawian kwacha, which replaced the Malawian pound in 1971 at par and was based on the nearby Zambian kwacha, was introduced. The Malawian kwacha, which replaced the Malawian pound in 1971 at par and was based on the nearby Zambian kwacha, was introduced. Since then, there have been two currency updates. By maintaining low inflation and generally decreasing the impact of political and economic forces on price fluctuations, the Monetary Authority of Malawi (MAM) has developed a new series of banknotes with the goal of maintaining a constant cost of living.
The introduction of the currency coincided with Malawi's adoption of its own currency following its independence from the British Empire. The kwacha, which replaced the Malawian pound at par, was based on the kwacha of neighboring Zambia. Since then, there have been two currency updates: the first, which had a 1:1 exchange rate with Zambia, and the second, which was by far the greatest upgrade to date.
The Reserve Bank of Malawi
The Reserve Bank of Malawi (RB) is the organization through which the Kwacha, the official currency of Malawi, is managed by the country's central bank. A parliamentary statute allowed for its establishment. The Reserve Bank of Malawi is a body in charge of overseeing banking, currency, and other financial matters. A legal foundation for the Reserve Bank was established by this act, which stipulates that it shall be known as a 'Banking Corporation' (BC) and shall have the authority to manage foreign exchange reserves as well as issue notes on behalf of its member banks or any other person who may apply for them on their behalf.
The nation's foreign exchange reserves are overseen by the Reserve Bank as well. Through its regular operations in the foreign currency market, it achieves this by controlling the supply and demand of the kwacha inside the nation. Together with commercial banks, microfinance organizations, and insurance firms, the Bank also serves other financial institutions.
Managing the country's foreign exchange reserves is another duty of the bank. As a result of its regular operations in the foreign exchange market, it controls the supply and demand of kwacha inside the nation.
The kwacha is controlled by the Reserve Bank of Malawi
The Reserve Bank of Malawi is the body through which the country's central bank administers the kwacha, which is the kwacha's official currency. As Malawi's central bank, the Reserve Bank of Malawi carries out a number of duties, including managing the country's currency rate, implementing monetary policy, and supervising the commercial banks that fall under its purview. As a semi-autonomous government agency, the Reserve Bank of Malawi's main responsibility is to direct and control the nation's monetary policy.
Hence, the Reserve Bank is a tool of the government that was established particularly to act as the central bank for monetary policy in Malawi. It is answerable to Parliament through the Board members, who are chosen by the President on the advice of the Cabinet Secretary or Chief Executive Officer (CEO). A Board of Directors oversees the RBM's administration. The President appoints the seven non-executive members of the Board based on the Cabinet Secretary's or CEO's nomination. Furthermore, serving on the board as ex-officio members are the Governor, Deputy Governor, and Executive Director.
The major central bank governing body is the Reserve Bank of Malawi. A governor who has been chosen by the president and given the parliament's blessing leads it. Each political party represented in parliament has one representative on the executive board, which has three members total.
Monetary Policy Committee
A group of representatives from the central bank known as the Monetary Policy Committee (MPC) routinely gathers to debate and make decisions about the monetary policy of the institution. This committee, which is led by the governor, has five members: two deputy governors, the chief economist of the finance division of the Central Bank, the secretary general, and the director of the research division. The MPC meets at least four times a year, and attendees from government ministries such as Finance & Planning Services (FPS), Treasury & Planning Services (TPS), and other MMD stakeholders are welcome to attend. The public is welcome to attend the MPC's regular Tuesday afternoon meetings. A discussion of monetary policy frameworks and an evaluation of recent economic events and their consequences are on the meeting's major agenda.