The Explainer: Why CBN is changing naira notes

CBN’s Godwin Emefiele surprised Nigerians earlier today when he announced plans to introduce new designs of the N200, N500, and N1,000 notes by December 15; a mere 50 days from today.  

The policy move is advertised as a means of bringing currency from outside the banking system into the banking system, thereby making monetary policy more effective in combating inflation. 

Some primary reasons cited included significant banknote hoarding, a scarcity of clean and fit banknotes, and the increasing ease with which banknotes could be counterfeited. 

This is what Emefiele said:

• “Statistics show that 85% of the currency in circulation are outside the volts of our commercial banks. Data indicates that N2.73 trillion out of the N3.23 trillion currency in circulation was outside the volts of commercial banks across the country.
• “In recent years, the CBN has recorded significantly higher rates of counterfeiting, especially at the high demonization of N500 and N100 bank notes.”

Emefiele also stated that the redesigning of the naira would make ransom payments to terrorists and kidnappers more difficult. Furthermore, Nigerians wanting to deposit more than N150, 000 cash must pay a deposit fee. So, this is a good way for the government to generate quick money.

The apex bank’s governor urged Nigerians to go to their banks and deposit their Naira notes, noting that the deposit fee would be waived for transactions worth less than N150,000. 

Emefiele also explained that the redesign of the currency is long overdue. According to him, “our existing series of banknotes -the naira, has not been re-designed in the last 20 years. The bank reasonably determined to achieve the objective of its mandate as enshrined in Section 2B of the CBN act of 2007 to ensure a strong and effective legal tender.” 

 “It is therefore no longer tenable to continue with business as usual especially given the continually evolving circumstances that could impede the optimal performance of our naira. Furthermore, we believe that the re-design of the currency will help deepen our drive to entrench a cashless economy, and a christ minting of our E-Naira will complement it.”