By Uche Amunike
The Central Bank of Nigeria (CBN) has stated that part of the reason why it has opted to redesign the Nigerian Naira notes is that there is an excessive rate of hoarding of the country’s currency outside the banking system, counterfeiting and also, insecurity in the country.
Speaking, during a press briefing, Wednesday, in Abuja, the CBN Governor, Godwin Emefiele made this known while addressing Newsmen.
According to him, the new Nigerian Naira notes will be in circulation from December 15, 2022, even as the old notes will still be used as legal tenders until January 21st, which is when the bank has set as the target for mop-up.
He advised members of the public to deposit all monies outside the banking system to the banks immediately after the launch in order to be given the new notes, explaining that there would not be any charges made for deposits.
His words: ‘In recent times, however, currency management has faced several daunting challenges that have continued to escalate in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.’
He further stated: ‘Significant hoarding of banknotes by members of the public, with statistics showing that over 85 percent of currency in circulation are outside the vaults of commercial banks. To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 trillion out of the N3.23 trillion currency in circulation , was outside the vaults of Commercial Banks across the country; and supposedly held by the public. Evidently, currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue.’
He decried the shortage of clean bank notes which worsened by the day with negative perception of the apex bank which increases the risk of counterfeiting as shown by several security reports.
‘Indeed, recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes’, he stated.
He explained that even though the standard practice for Central banks all over the world was to redesign, produce and circulate new local legal tenders every 5-8years, the existing Nigerian Naira notes has not been redesigned in the past 20years.
Emefiele believes that the stand of the CBN is that redesigning the Nigerian Naira notes will aid strengthen the drive to entrench cashless economy, since it will be complemented by increased minting of the eNaira. This, he said, will further make monetary policy more efficacious by reining in the currency outside the banking system into the banking system.
On the insecurity in the country, Emefiele averred that as soon as the volume of money stored outside the banking system was no longer accessible for sourcing ransom payments, incidents of kidnapping and terrorism would be minimized.
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 N200, N500, and N1,000 levels.’
The Nigerian Naira notes, he said, will be in circulation from December 15, 2022 and will circulate together with the existing ones until January 31, 2023 when the existing currencies shall no longer be considered legal tenders.