This month, I cover two snippets of broad interest, the maximum value for which a cheque can be written and an update on the Big Mac index with a political twist.

According to the Payments Association of South Africa (PASA); yes there is an Association for everything! With effect from 16 July 2012 The South African Reserve Bank has reduced the maximum value for which a cheque can be written. The current maximum value per cheque is R5million. This will be reduced to R500 000. One of the main reasons for the reduction is risk related. Less than 1% of cheques in the industry are for values above R500,000, yet these high value cheques account for more than 40% of the total industry’s fraud losses. By reducing the cheque limit, this will directly curb cheque fraud.

In general, there has been a continuous decrease in cheque volumes (24% per year), which can be attributed to the number of different electronic payment options available. Electronic payments are safer, faster, cheaper and increasingly preferred by banks’ clients. Reducing the cheque limit is not a strategy to do away with cheques. Further analysis by banks is required before any major decision on the future of cheques is taken.

Last year at about this time I wrote about the Economist’s Big Mac Index. Although it seems strange, the index does provide a good indicator of the relative ‘real’ exchange rates of various currencies. One can determine whether a particular currency is under or overvalued by reference to the globally standardised Big Mac hamburger. Surprisingly also, the Big Mac has primary and secondary cost inputs which cover a big spectrum of an economy. This includes the cost of packaging, agricultural products, property rental, labour, and delivery costs. Of course one of the challenges is evaluating how the currency under or over valuation relates to the buying power of individuals in each country. To properly compare, one would need to count how many Big Mac’s a person in a directly comparable job could buy, say, per day with their salary in these various economies. The task becomes more complicated by, for example, different tax rates and in getting some sort of standard job description. I started by looking at secretaries which seemed to be a fairly universal job category, but one quickly gets bogged down in the responsibility scales within a secretarial function. In the financial planning world, planners in highly regulated countries earn more, because of the risk they run, than in less regulated economies, and so on.

The Economist and the International Business Times came to my rescue once again, by comparing the salaries of the leaders of various countries. Given that, at least politically, these leaders are at the top of the food chain (the buck stops there!) the work task is a little more uniform. Arguably, the heads of bigger countries should earn more than smaller countries, but as you will read this is not so. Below for your casual interest is the number of Big Macs each leader could buy per day in his home country with his salary.

There are a huge number of caveats here so be aware, some heads of state don’t pay tax, the published salary is just that, it may not include the cost of perks or the overall cost of running the head of state’s household. The year applicable to the salary may not be consistent. The ability of some of the Heads of state to consume this many burgers a day has not been assessed.

Loading Conversation