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 Forget Liquidity Crisis!
Everyone in the banking and business sectors is now talking about the ongoing liquidity crisis. Looking at the urgency of the problem there is no time to waste on analyzing whether the problem is real or fictitious, temporary or long-term or whatever. Therefore, it is imperative to jump straight to find out the reasons behind the crisis so that the whipping boy could be whipped more for creating the crisis.
For dilettante economics students, let me tell that the liquidity crisis is all about the lack of money with the banking system, not about the lack of water in the drinking water supply system of the Kathmandu valley. Neither is it about the lack of liquor in the roadside bhattis.
The first and foremost reason for the liquidity crisis is the absence of governor to sign the currency notes as the one governor we have has been sent to hibernation. When the governor was on the hot seat, everyone from the Royal Palace to the Finance Ministry and from the Defense Ministry to the parallel government ruling from the jungles frequented him requesting him to divert the flow of liquidity towards their chosen areas. Now the liquidity distributor himself (women have never held the high post) has no access to the pool from where the liquidity could be supplied. Hence there is a drought!
Another reason behind the current currency crisis is the aspiration of some of our businessmen to be the NRNs and to make their companies multinational. In the present WTO era it is but natural to aspire to be an MNC. They have been parking their money abroad. Since the liquidity is like liquid water, it also flows out of the country like the waters of our rivers flow down to South. Anyway, we cannot challenge the law of gravity.
The third reason is the load-shedding. The bank ATMs are forced to work beyond their capacity during the limited hours of power supply. This is an example of one liquidity crisis (dry rivers) causing another liquidity crisis (dry ATMs).
Initially, I was surprised with the central bank’s lackadaisical attitude towards liquidity crisis, but soon I realized that it’s an innovative idea to let the people develop a habit of living in the cashless future. Maybe even the banks are planning to go offline in the near future!
There maybe some who claim that this problem will be solved with the holding of CA polls. We cannot disagree with them too. All the solidified cash in the hands of the political parties is sure to be liquefied during the polls and that will surely flush the country with a lot of liquidity. Better we get prepared with gum boots, swimming costumes, umbrellas and raincoats to tide over the floods!
Another solution to this liquidity crisis is coming from the stock market, as some analysts are predicting a big bubble burst releasing a lot of liquidity held in the bubble. Hope that liquid flows to the banks from the stock market making the bankers happier.
However, we should not forget one fact that the current liquidity crisis is not affecting the general people who are so jubilant about the forthcoming CA polls. Moreover, as long as the mushrooming liquor and beer companies continue to supply bijulipani in the markets one needn’t worry about the lack of liquidity, neither about the load-shedding. Let’s wet our throat and stop talking about this dry subject!
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