Relational Exchange, Damaged Currency and the Informal Monetary Order of the Residential Halls of the University of Dhaka

Bangladesh remains a profoundly cash dependent economy in which torn, soiled and mutilated banknotes circulate widely despite repeated regulatory directives from Bangladesh Bank, most recently a circular of April 2026 threatening action against scheduled banks that refuse to exchange damaged notes. This commentary examines an overlooked counterpoint to that regulatory failure: the closed exchange economy of the residential halls of the University of Dhaka, where canteen vendors, tea stalls and students accept severely damaged notes at full face value as a matter of settled practice. Drawing on direct observation and informal conversations with hall vendors, the paper interprets this arrangement through the lenses of relational exchange, the embeddedness of economic action and the theory of money as a record of social memory. It argues that the hall economy succeeds where formal institutions have struggled because repeated interaction and mutual recognition substitute for the physical integrity of the note, effectively privatising the cost of currency degradation within a community of trust. The paper then traces the distributional consequences of formal refusal, including the discount paid to informal note traders, which functions as a regressive poverty premium. It concludes with policy implications, including enforcement of the Clean Note Policy and a reassessment of polymer substrates following the withdrawn experiment of 2000.