Godwin Emefiele, the governor of CBN, the Central Bank of Nigeria, declared on Wednesday that the bank would issue new naira notes by December 15, 2023. Yesterday in Abuja, Emefiele made this declaration and provided justifications for the action.
CBN governor claimed that this was done to limit the amount of counterfeit money in circulation and to prevent kidnappers and terrorists from receiving ransom payments. In fact, he said, “Some of the trademarks of a great central bank are the integrity of local legal money, the efficiency of its supply, and its efficacy in the conduct of monetary policy. However, in recent years, currency management has had to contend with a number of enormous problems that have only increased in scope and sophistication, with unforeseen effects on the CBN and the nation’s integrity.
More specifically, as of the end of September 2023, the CBN’s data indicates that N2.73 trillion out of the N3.23 trillion in currency in circulation was allegedly kept by the general public outside the vaults of commercial banks across the nation.
Evidently, the amount of money in circulation has increased significantly from 2015, going from N1.46 trillion in December to N3.23 trillion as of September 2023. I must add that this tendency is extremely concerning and must be allowed to continue.
With regard to how it would lessen ransom payments, he said, “Also, in view of the current level of the security situation in the country, the CBN is convinced that the incident of terrorism and kidnapping will be minimized as access to large amounts of money used as a source of funds for ransom payment will begin to dry up.”He went on to list several justifications for redesigning naira notes.
The people’s large stockpiling of banknotes; the worsening shortage of clean and fit banknotes, which has a bad impact on public opinion of the CBN and increases the risk to financial stability; and the rising ease and risk of counterfeiting, as shown by several security reports. In fact, recent breakthroughs in photographic and printing technologies have made counterfeiting considerably simpler, he continued. The CBN has noted significantly greater counterfeiting rates recently, particularly for higher-denomination N500 and N1,000 banknotes.
The CBN governor added that the enhanced production of the e-Naira would complement the redesign of the currency and help to promote a cashless economy. The top bank governor claimed that the naira had not undergone a redesign in the previous 20 years, despite the fact that it is recommended by international best practices that central banks redesign, create, and circulate new local legal tender every five to eight years.
The new series of banknotes would only be available in denominations of N100, N200, N500, and N1,000, according to a speech that was subsequently made public. He stated that existing notes would cease to be considered legal tender by January 31, 2023, in order to quickly get rid of the money that Nigerians are hoarding. Emefiele further advised Nigerians to deposit their Naira bills at their banks, noting that deposits under N150, 000 will not be charged a deposit fee.
In order to handle all of the cash that would be returned by their customers, he also instructed all commercial banks to maintain their currency processing centers open from Monday through Saturday.