From May 1, 2025, banks and exchange offices in Kyrgyzstan are officially allowed to charge a fee for accepting and exchanging U.S. dollar bills issued before 2006. These notes are often referred to as “white” dollars due to their outdated design and less advanced security features. However, as Akchabar’s analysis shows, some commercial banks did not wait for the new regulation to take effect — and have already started charging fees for transactions involving such dollars.

According to the National Bank, the introduction of the fee is a necessary measure. It is intended to offset the costs of transporting old bills out of the country and to reduce the risks associated with counterfeit currency in circulation. However, the logic behind this decision raises questions: how exactly are additional fees supposed to reduce the number of counterfeits if “white” dollars continue to enter the country in large volumes — especially since 2022?

It is worth recalling that after the imposition of sanctions on Russia — including those targeting currency transactions — a significant influx of old U.S. dollar bills poured into Central Asian countries, particularly Kyrgyzstan. There is no precise data on how much of this outdated currency is currently held by citizens. However, by the end of 2006 alone, Kyrgyz citizens had deposited an amount in old dollar bills equivalent to 11 billion 35.7 million KGS in local banks — which, at the exchange rate of that time (38.1238 KGS per dollar), amounted to 289.5 million USD. Since then, that figure has likely grown by several tens of millions.

It is important to note that old U.S. dollar bills remain legal tender in the United States and have not been withdrawn from circulation by the Federal Reserve. Nevertheless, starting May 1, the costs associated with transactions involving these old bills will fall not only on banks but on all of us. Moreover, each bank will set its own commission rate, as the National Bank of the Kyrgyz Republic does not regulate this issue under current legislation. As a result, even with a modest 1% fee — a rate already announced by some commercial banks — commissions on the amount of “white” dollars held by Kyrgyz citizens as of the end of 2006 alone could reach nearly 3 million USD. And this figure does not account for the influx of such bills into the country in recent years.

To be fair, challenges with “white” dollars existed even before the recent policy change. Banks and exchange offices were often reluctant to accept them, frequently offering less favorable exchange rates. Some financial and credit organizations (FCOs) even went ahead and introduced their own service fees for handling such currency without waiting for official guidance from the regulator. As revealed by a phone survey of bank call centers conducted by Akchabar, at least five banks have already started charging a commission on transactions involving “white” dollars. Another bank reported applying a special exchange rate specifically for these notes.

At the same time, the National Bank has clearly stated its position: charging a commission for exchanging old-design U.S. dollars (issued before 2006), which have not lost their status as legal tender, will only be permitted starting from May 1, 2025.

"Until this date, there is a direct ban on setting different exchange rates or commissions based on the year of issue of a banknote. Any commission charged for the exchange of such dollars before May 1 is not in compliance with the law," — the National Bank of the Kyrgyz Republic commented to our publication, emphasizing that appropriate measures will be taken against violators if such actions are identified.

It is important to note that this does not apply to fees for accepting genuinely worn or damaged banknotes (regardless of the year of issue), or to commissions for other banking services such as account deposits or money transfers — banks have the right to set those independently.