The Fate Of Cheques

A rumor that someone had decided to abolish cheques as a mode of payment, alarmed millions of citizens more than the regular daily flood of bad news. The rumors were denied by Zivan Mirkov, assistant director of the Serbian payments transactions office. The denial makes it clear that this office can withstand every new flood of cheques (last month close to 15 million cheques were processed promptly). It underscores that, with this kind of an inflation, it is impossible to change cheques with bank notes, regardless of the fact that the state printing works operate round the clock, printing between 1.6 and 1.9 million bank notes daily. Mirkov denied rumors that cheques would be abolished, but didn't dare give guarantees about their survival.

Those who do not listen to rumors but see what is happening in the shops, know that the days of cheques are numbered. When inflation reaches 100,000% per month, there is no government or inspector's office in the world which can force shopkeepers to accept cheques as a means of payment, since cheques are losing value by the hour. A network of 1,830 state auditing offices, bank and post office branches give out cash when someone makes a cash payment.

There is a growing number of state-owned producers who, according to Socialist Party of Serbia (SPS) campaign chief Zoran Arandjelovic are working against the system, and do not wish to produce and deliver their products (they probably don't want to do this with deferred payment). If the dinar snuffs out of its own accord, then cheques will be the first to go.

Rumors that cheques will be abolished have been encouraged by the widespread practice of refusing to accept cheques for milk and bread (in Novi Sad), and the authorities themselves fear that they will not be able to keep them alive. At its December 9 session, the Federal Government issued a statement condemning the continued inflating of hard currency, payments in hard currency, the removal of goods from shops, the transfer of business accounts to current accounts, the payment of wages from the daily turn-over, the removal of cash from cash-registers, the approval of no-interest lending and the payment of workers in goods. In short, all that violates financial discipline. Nothing was said on the refusal of many to accept cheques.

A signal that the position of cheques is very vulnerable, is a tacit inter-bank agreement whereby citizens are issued only ten free cheques/month and they have to pay 5.5 million dinars for every extra cheque. Ten cheques per month are not nearly enough with a low maximum sum payable per cheque (the value of two packs of cigarettes or five, six eggs). This limiting can be brought into connection with the current penalties on interest rates. Namely, the highest interest rate payable in the event of a negative balance is 20,400%, while monthly inflation is around 100,000%.

If a new government comes into power and shows readiness to push through extensive anti-inflationary measures, it will be necessary to suspend cheques as a means of payment for several months, because of the disintegration of the legal order.

On the other hand, experts claim that the problem with dud cheques written out by citizens, is a minor one compared to what has been done by the regime's top officials and their finance ministers.

According to data issued by the Association of Banks of Yugoslavia, of the 2,800,000 owners of current accounts those who are in the red, have borrowed only 19% of the overall turn-over, which simply means that commercial banks here have enormous profits. While we queue for small change they are dealing in really big money.