This week's extraordinary cabinet meeting approved a Presidential Order issuing new banknotes of Rwf1000 and Rwf500 with legal tender.
The order will be implemented by the Central Bank.
According to officials from the bank, the move was necessitated by a number of reasons, including the need to upgrade security features to avoid counterfeiting.
There will also be a change in design and this will serve to replenish the bank's stock to support the public demand as the notes are the most used in the economy.
The Director for Currency and Banking Operations at the National Bank of Rwanda (BNR), Denis Dadou Habumugisha, said that the move will also help keep the banknotes in circulation clean.
Following the approval by cabinet, the development will take effect as soon as the presidential order is published in the gazette as provided by law.
During the transition period towards the adoption of the new notes, Habumugisha said that the new banknotes of Rwf1000 and Rwf500 shall be circulating together with the existing banknotes series which have legal tender until the bank decides to demonetise the old ones.
It is still unclear how much the adoption of the legal tender will cost the Government.
In regards to the need to change the Rwf500 note, retail traders across Kigali city said that the current notes wear out fast with a majority of them only held together using adhesive tape. Others say that the Rwf500 notes are increasingly becoming scarce.
Across the world, governments have been investing in improving security features of their legal tender as counterfeiters improve on their techniques. Currencies across the world, including the American dollar, have been vulnerable to counterfeiting.
The cabinet meeting also renewed Central Bank Governor John Rwangombwa term. Each term is six years. Rwangombwa was appointed as governor in 2013 and has been credited with maintaining the stability of the economy over the last few years.
Among aspects he has been keen on improving include quality of banking and insurance services as well as keeping a close eye on the Franc's depreciation trends.