The Central Bank Governor, Godwin Emefiele, has said that the apex bank would redesign the country’s currency.
Emefiele, who announced this at a press briefing in Abuja, this afternoon, said that the exercise would affect the the highest denominations: 200, 500, 1000 notes.
He said that the action was taken in order to take control of the currency in circulation.
According to him, the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.
Mr. Emefiele said that the new notes will be released for public use on December 15, 2022.
He also said that the old notes and the new notes would circulate together until January 31, 2023 when the old notes would cease to be legal tender.
Gov Emefiele said that there have been persisting concerns with the management of current series of banknotes, and currency in circulation, particularly those outside the banking system in thecountry.
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.”
The challenges he said included hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation was outside the vaults of commercial banks.
He added that the worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability as well as, increasing ease and risk of counterfeiting evidenced by several security reports were reasons for redesigning the notes.
He said that recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier and that in recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.
The CBN boss noted that although global best practice was 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.
200, 500 1000 affected
He 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.
“In line with this approval, we have finalized arrangements 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.
“Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks in 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 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 so as to accommodate all cash that will be returned by their customers.
“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 purchase of goods and services.”
The governor said that his team was mindful of those in rural areas and that facilities would be provided for them where bank accounts could be opened for them or their old notes exchanged for the new ones.
He.added that the action would also raised its stake in addressing the challenge of inflation.
Reminded that the current regulation allows only N150, 000 free cash deposit, he said that even if a customer wanted to deposit N 1 billion, the person would be allowed to do so.
Mr. Emefiele assured that the CBN would continue to monitor both the financial system in particular, and the economy in general, and always act in good faith for the achievement of the Bank’s objectives and the betterment of the country.
There has been claims even by top government officials that some unscrupulous members of the society were hoarding large volumes of currency notes in warehouse, farms, septic tanks.
Very dirty and smelly Naira notes have been in circulation, especially since political activities heightened across the country.