Nigeria's Central Bank Governor, Godwin Emefiele has said that the country's currency will be redesigned to take control of the currency in circulation.
The process would affect the highest denominations of notes: 200, 500, and 1000, according to Emefiele, who made this announcement at a news conference in Abuja on Wednesday.
The new notes, Mr. Emefiele said, will be made available to the general public on December 15, 2022.
The old notes and the new notes would continue to be in circulation until January 31, 2023, when the old notes would no longer be considered legal tender.
He said that the CBN would not allow a situation in which the majority of the country's currency notes were kept outside bank vaults, to continue.
Godwin Emefiele
Redesigning To Check Currency Counterfeiting and Hoarding.
The CBN Governor noted that there have been ongoing issues with the administration of the current series of banknotes and currency in circulation, notably those outside the country's banking system.
He said, “As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007.
"Indeed, 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.
“In recent times, however, currency management has 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.”
According to Emefiele, available data shows that more than 80% of the currency in circulation is not kept in commercial banks' vaults, as people tend to hoard banknotes.
He also noted that the negative perception of the CBN, the worsening shortage of clean, usable currency and the rising risk and ease of counterfeiting as shown by many security reports are some of the reasons for redesigning the notes.
Emefiele stated that in recent years, the CBN has noted much greater rates of counterfeiting, particularly at the higher denominations of N500 and N1,000 banknotes as a result of recent developments in photographic technology and printing devices that have made counterfeiting relatively easier.
Although it was considered best practice for Central Banks to redesign, create, and distribute new local legal tender every 5-8 years, the CBN governor pointed out that the Naira has not undergone a redesign in the past 20 years.
New Series Of 200, 500, and 1000 Naira To Be Produced and Circulated.
He said, “Based on 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.
“In line with this approval, we have finalized arrangements for the new currency to begin circulation on December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender.
“Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes to the CBN effective immediately. The newly designed currency will be released to the banks on 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 to withdraw the new banknotes once circulation begins in mid-December 2022.
"All banks are therefore expected to keep open, their currency processing centers from Monday to Saturday to accommodate all cash that will be returned by their customers.
"For 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 the purchase of goods and services.”
The governor assured residents of rural areas that the CBN would provide facilities to enable them open bank accounts or swap their old currency for new ones, adding that the action will further enable it to address the inflation problem.
When reminded that the existing law only permits a free cash deposit of N150 000, Emefiele said that even if a customer wants to deposit N 1 billion, they would be able to do so.
Mr. Emefiele gave the assurance that the CBN would keep an eye on the financial system in particular and the economy generally, and always operate in good faith to further the goals of the Bank and the good of the nation.
Redesigning the Naira Is Unacceptable To Us - Concerned Northern Forum.
Meanwhile, a group called the Concerned Northern Forum on Wednesday protested the redesign of the naira notes calling it a show of incompetence by the CBN and threatening to resist its implementation.
The group claimed that redesigning the Naira notes would be extremely expensive for the country and a burden to taxpayers.
It expressed worry that the redesign of the naira notes would not improve Nigerians' level of living and that, as a result, the procedure was undesirable.
In a statement released through its spokesman, Abdulsalam Kazeem, in Kaduna on Wednesday, the group said,
“The attention of the leadership of Concerned Northern Forum has been called to a press conference organized by the current Central Bank Governor in Abuja, where he stated that (CBN) has redesigned the #200, #500, and #1000 naira notes, effective December 15, 2022.
“This to us is nothing but a sign of incompetency. Our economy as a nation is down and our Naira has depreciated to a minimal value all the leadership of the Central Bank of Nigeria could offer us as a solution to the above is to redesign our currency.
“The redesigning of the said currency will only cost our nation huge sums of money at the expense of taxpayers.
“This is coming at a period when we are borrowing to fund significant parts of our annual budget and significant parts of the borrowing go to debt servicing and yet the only solution the apex bank could offer is to redesign our currency.
“We are concerned as representatives of our people and region. If we may ask; will the new design make our currency gain value at the exchange rate market? Will it add value to the standard of living of the citizenry of our region and the nation at large? These are some questions begging for immediate answers.
“If no satisfactory answers are provided, as we already expect none, for the above questions, the apex bank should immediately stop the process of the new design, or else it will be resisted by us in collaboration with other concerned civil society organizations from within and outside our region.
“To set the record straight, look at the current exchange rate of a Naira to a dollar or pounds and you will agree with us that our currency has lost its value completely and what we need now are serious economic policies that will strengthen our Naira against dollar and pounds and anything short of this, is unacceptable by us. We believe it would inflict more against the value of our revered naira.
“The decision to redesign the Naira is obviously to empower certain individuals, consultants, or contractors who are desperate to make something before the end of the current administration.
"This idea should be rejected by all and sundry at any rate, since it’s not in the interest of the nation and it will add no value to the current multiple economic challenges the nation is facing due to bad economic policies of the current Central Bank Governor.”
Economy
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