Following the decision of the Central Bank of Nigeria (CBN) to redesign, produce and circulate new series of banknotes at N100, N200, N500, and N1, 000 levels, stakeholders have said the development must be backed with parity of foreign currencies.
They argued that currency changing is done with the mind of aligning the currency change to the foreign exchange relationship.
Managing Director, Maxifund Investment Securities Limited, Mazi Okechukwu Unegbu was of the view that there is proper control of the nation’s currency.
He said that redesigning should be done with the aim of ensuring foreign exchange parity between the Nigerian naira, the US dollar, the pound sterling and the Euro.
Unegbu who maintained that he is not in support of any change in currency urged the regulatory authorities to be proactive in order to save the nation’s economy.
To him, the CBN should be fully in charge of the currency in order to save the economy.
Former President, Association of National Accountants of Nigeria (ANAN) Dr. Samuel Nzekwe commended the CBN, saying that there is presently a lot of proliferation of the naira.
Nzekwe who maintained that the development is for strategic reasons urged the CBN to use high-standard materials for the printing of the new currency.
They must do it in such a way the cost of printing the naira will not be higher than the value
He said, “If you are printing a 50 kobo note for example, and the cost of printing the note is N100, you can see that the cost is higher than the intrinsic value of the naira. The CBN has to make sure that we realize the cost-benefit of the new money.
CBN Governor, Godwin Emefiele Monday said it has obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N100, N200, N500, and N1, 000 levels.
Emefiele who disclosed this at a press briefing Wednesday in Abuja said the circulation of new currency takes effect from December 15, 2022, adding that new and existing currencies should remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender.
He maintained that the process is a discharge of the apex bank’s key function of currency management as enshrined in Section 2 (b) of the CBN Act 2007.
As of September 2022, Emefiele maintained that the currency in circulation stood at N2.23 trillion, adding that out of that N2.73 trillion is outside the vaults of the banks.
Emefiele said that “First of all, what we want to do is mop up all the 2.23 trillion back into the CBN so that we can take control of the money supply again, and begin to see how this will help rein in inflation. No doubt we believe it will have a positive impact on inflation.
According to him, in recent times, currency management has faced several challenges that have continued to escalate in scale and sophistication, with unintended consequences for both the CBN and the country.
He, however, noted that all Deposit Money Banks (DMBs) 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.
Emefiele further noted that 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.
He said that all banks are therefore expected to keep open, their currency processing centers from Monday to Saturday so as to accommodate all cash that will be returned by their customers.
Emefiele said that “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 the 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 acts in good faith for the achievement of the Bank’s objectives and the betterment of the country.
“Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy is some of the hallmarks of a great Central Bank,” he said.
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.
He listed the challenges faced by currency management to include, Significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of the currency in circulation are outside the vaults of commercial banks; Worsening shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial stability; Increasing ease and risk of counterfeiting evidenced 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.
“Although 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.
