WBS Keyvisual 2020 master Green

Forecasting banknote demand

A Currency Forecasting Model is one of the most important systems in central banks for effective and efficient currency (banknotes & coins) management. Central banks need to forecast currency demand by the market. The model determine the volumes of currency to be required at any specific time and the future distribution to the market through commercial banks. Central banks have different forecasting models. More than 20 years ago, the Bank of Namibia was using an econometric currency forecasting model. This model was complex and it was not always 100% accurate in its forecasting. The Bank developed an inhouse Currency Forecasting Model. This Model proved to be one of the best and very accurate in its forecasting. It is important for central banks to have a robust currency forecasting model that will help them to better manage currency production cycle. This presentation will benefit both central banks from an effective currency management perspective and currency suppliers who, for proper planning purposes, must have an insight about the possible times when their clients are likely to place orders. The presentation will also inspire currency managers to either develop their own currency forecasting models or consider adopting the Bank of Namibia’s currency forecasting model.