The new Naira notes
Naira redesign: FG to withdraw N2 trn from circulation
The Central Bank of Nigeria (CBN) has declared that the expected volume of cash that would return to the vaults under the ongoing dumping of old N1000, N500 and N200 notes would breach N2.0 trillion.
However, experts say that withdrawal of the high currency notes would mainly whittle the value but would not significantly reduce the volume of cash in circulation by next week when deadline to replace old notes ends.
Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, told reporters in Abuja on Tuesday that some 1.5 trillion in the value of old Naira notes has been clawed back while more cash is expected to be dumped in the last week of the exercise.
“We are hoping that getting to this week, we will move closer to 2 trillion naira,” he said.
Africa’s most-populous nation started issuing redesigned 200-, 500-, and 1000-naira notes in mid-December to mop up excess cash liquidity and take control of money supply. Nigeria’s cash in circulation has more than doubled since 2015 to 3.23 trillion naira, Emefiele said.
That suggests “people are hoarding it, people are keeping vaults in their homes, we cannot allow them to be banks in their homes, they don’t have the license to build bank vaults in their homes,” he said. “They should release that money back to CBN because what they are doing is undermining monetary policy, they are keeping those monies to speculate against a currency, which is making our work more difficult.”
To increase adoption the central bank on Monday allowed citizens without bank accounts in rural areas and those with limited access to formal financial services to exchange a maximum 10,000 naira per person of the old notes through banks or agents without having to open an account.
It’s also working with about 1.4 million agents and lenders to reach citizens across the country to swap old notes for new ones or open bank accounts. Using representatives to penetrate the rural areas forecloses an extension of the deadline, the governor said.
People who don’t exchange the notes by Jan. 31 will have “useless” cash in their hands, Emefiele said.
