October 26, (THEWILL) – The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele has explained the reasons for the sudden policy of redesigning the nation’s currency notes – the N200, N500 and N1,000 with immediate effect.
The apex bank boss who announced this at a press briefing on Wednesday, October 26, 2022, said the measure became necessary to safeguard the integrity of the monetary policy authority and the nation which was being compromised.
Emefiele said the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.
He however noted that currency management had faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.
He said currency hoarding, counterfeiting and mishandling are the key reasons for the decision to withdraw the banknotes.
He listed as primary challenges:
“Significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are outside the vaults of commercial banks;
“Worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability;
“Increasing ease and risk of counterfeiting evidenced by several security reports.”
He said, “On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections (a) and (b) of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N100, N200, N500, and N1,000 levels.”
According to Emefiele, while global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.
He said that in line with the presidential approval, the apex bank had finalised arrangements for the new currency to begin circulation from December 15, 2022.
He stressed that the new and existing currencies shall remain legal tender and circulate together until January 31, 2023 when the existing currencies shall cease to be legal tender.
He said that all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately, adding that the newly designed currency will be released to the banks in the order of First-come-First-serve basis.
“Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them withdraw the new banknotes once circulation begins in mid-December 2022.
“All banks are therefore expected to keep their currency processing centers from Monday to Saturday so as to accommodate all cash that will be returned by their customers.
“For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect. Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts.
“Members of the public are to please note that the present notes remain legal tender and should not be rejected as a means of exchange for purchase of goods and services.
“We would like to use this opportunity to reassure the general public that the CBN would continue to monitor both the financial system in particular, and the economy in general, and always act in good faith for the achievement of the Bank’s objectives and the betterment of the country,” he said.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
