‘CBN’ modifies new naira notes, and halting deposit fees. “Why” ?
In December, the CBN will introduce new naira designs and halt deposit fees.
Beginning on December 15, 2022, the Central Bank of Nigeria will introduce new designs to replace high-value naira notes. The bank claimed that it is taking these actions to regulate inflation, maintain control over the amount of legal tender in circulation, and combat currency fraud.
By redesigning the N100, N200, N500, and N1000 and beginning to issue them by December, it is intended to have phased out the old notes by January 31, 2023.
The governor, Godwin Emefiele, stated in a Wednesday press conference that currency management has confronted a number of difficult problems that have grown in scope and sophistication, with repercussions for the CBN’s and the nation’s credibility.
Governor of the Nigerian Central Bank, Godwin Emefiele (CBN).
According to data, over 85% of the money in circulation is kept outside of commercial banks’ vaults, so one of the main problems is that the public hoards a lot of banknotes.
To be more precise, as of the end of September 2022, CBN figures reveal that N2.73 trillion of the N3.23 trillion in money in circulation was reportedly held by the general public outside the vaults of commercial banks across the nation.
Evidently, the amount of money in circulation has increased significantly during 2015, from N1.46 trillion in December to N3.23 trillion in September. We must allow this concerning tendency to continue. He explained that the bank thinks this rise will help to lower inflation, which reached a 17-year high in September.
Additionally, he stated that the country’s scarcity of clean, suitable banknotes is getting worse, which has a negative impact on public view of the CBN and raises the risk to financial stability.
Ransom Payment
Mr. Emefiele claims that because big sums of money won’t be accessible, the decision to disseminate the new notes will discourage ransom payments and ultimately decrease the amount of cash in circulation.
The CBN is certain that occurrences of terrorism and kidnapping would be reduced as access to the significant amount of money utilized outside of the banking system as a source of cash for ransom payments will start to dry up in light of the current level of security in the nation.
He added that the bank thinks the redesign of the currency will strengthen the CBN’s efforts to establish a cashless economy because it will be paired with expanded production of our eNaira.
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He claimed that doing so would further “rein in the currency outside the banking system into the banking system, so increasing the efficacy of monetary policy.”
There are worries that the transition could cause confusion because it might be difficult for people living in rural areas far from bank branches to change their currency notes in the allotted time.
EFCC Applauds the Move
The CBN’s decision to redesign and reissue greater denominations of the money was praised by the Economic and Financial Crimes Commission, or EFCC.
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Abdulrasheed Bawa, the head of the Economic and Financial Crimes Commission
Abdulrasheed Bawa, the head of the Economic and Financial Crimes Commission
Abdulrasheed Bawa, the chairman of the EFCC, called the action by the central bank “a well-considered and timely response” to the problems with currency management that have harmed the nation’s monetary policy and security requirements.
The CBN, the EFCC, and a few other financial sector regulators recently collaborated closely to figure out the best way to stabilize the nation’s monetary policy climate. According to a statement by its spokesperson Wilson Uwujaren, “It is heart-warming that the CBN has shown fortitude in making this bold move that I feel would bring sanity to the currency management situation in Nigeria.”
According to Mr. Bawa, the EFCC would keep an eye on the procedure to make sure that dishonest participants, currency speculators, and their allies within the BDCs do not jeopardize the exercise. Additionally, he urged banks to be aware of their reporting requirements and refrain from helping dishonest clients use their system to launder suspected criminal proceeds.
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