*To release new N200, N500, N1000 notes Dec. 15
*Sets Jan 21, 2023 deadline for old notes
*Says N2.73trn out of N3.23trn currency in circulation outside vaults of commercial banks
Nume Ekeghe, James Emejo and Kasim Sumaina
The Central Bank of Nigeria has stated that in its bid to reduce the excessive hoarding of naira notes outside the banking system it is set to introduce newly redesigned naira notes for N200, N500 and N1000.
The Governor of the Central Bank, Godwin Emefiele announced this at a press briefing in Abuja Wednesday.
He noted that the new notes would be in circulation from December 15, 2022 and would also accommodate the old notes as legal tenders until January 21, 2023, which the apex bank has set as the target for mop-up.
He advised that there would be no charges for deposits and that the public should deposit monies outside the system to the banks to get the new notes once launched.
He said: “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.
Listing the these challenges, he said primarily they include: “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.”
Other challenges listed include, worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; and 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,” he added.
He said: “Although global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, our existing series of the Naira has not been redesigned in the last 20 years.”
Emefiele said the apex bank also believes that the redesign of the currency will help deepen the drive to entrench cashless economy as it will be complemented by increased minting of eNaira.
“This will further rein in the currency outside the banking system into the banking system thereby making monetary policy more efficatious”.
Speaking further, Emefiele said “in view of the prevailing level of security situation in the country, the CBN is convinced that the incidents of terrorism and kidnapping would be minimized as access to the large volume of money outside the banking system used as source of funds for ransom payments will begin to dry up.”
He therefore 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 CBN governor said arrangements had been finalised for the new currency to begin circulation from 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,” he added.
