Kazakhstan’s central bank to buy dollars banks don’t want

Kazakhstan’s National Bank will continue buying back older-design U.S. Federal Reserve notes, commonly known as «white dollars,» from Kazakhstani banks to prevent the accumulation of unclaimed cash in the country, according to the regulator. To remove these older, unpopular banknotes from circulation, the National Bank began repurchasing them from financial institutions last year.

«At the end of last year, the National Bank facilitated the return of $48 million in unclaimed U.S. dollar cash to the U.S. Federal Reserve. This direct arrangement with the Fed, involving older banknotes accepted from second-tier banks, helped minimize transportation, insurance and other expenses,» the National Bank stated.

The regulator added that the agreement with the Fed lowered the commission for banks to 0.3%, though it did not specify the previous rate. The bank only noted that the figure was determined based on market quotes from foreign counterparties.

In late November, some Kazakhstani banks introduced a 2% commission on all cash transactions involving U.S. dollar banknotes issued between 1996 and 2013. A month later, the National Bank reported a rise in complaints from Kazakhstanis about bank exchange offices refusing to accept «white dollars,» a practice that is not legally permitted.

Under existing regulations, exchange offices are required to accept such banknotes without commission, provided they are not damaged and remain suitable for circulation. If an exchange office refuses to accept such banknotes, a complaint should be filed with the local branch of the National Bank. However, banks are allowed to set commissions for cash transactions.

In mid-January 2025, the regulator imposed a cap of seven tenge on the spread (the difference between the buying and selling rates) for cash dollar transactions at exchange offices. The spread limit for euros was set at 10 tenge. The National Bank explained the measure as an effort to «reduce speculative activities in the currency market and mitigate financial market risks.»

Experts linked the new restrictions to low public demand for older U.S. dollar banknotes, as newer bills continued to be accepted at market rates. Economist Galim Khussainov and Archin Galimbaev, the head of the Association of Exchange Offices of Kazakhstan, shared this view.

Meanwhile, the Fed has stated that U.S. banknotes issued since 1914 remain legal tender with no expiration date. However, this policy applies only to government agencies, while private businesses retain the discretion to accept or reject older bills.