CBN Vows To Curb Inflation As Buhari Unveils New Naira Notes

The Central Bank of Nigeria had on October 26 announced its plan to redesign the higher denominations of the Naira (N200, N500 and N1000) notes. It gave December 15, 2022, as the date for the launch of the new notes.  But in the governor’s communique to the media at the monetary policy meeting held on the 22nd of November 2022 announced that President Muhammadu Buhari, in his weekly cabinet meeting at the state house in Abuja on Wednesday 23rd of November 2022 will formally unveil the new Naira notes onward to the 15th of December launch.  The central bank governor, Godwin Emefiele reaffirmed the apex bank's resolve in curbing inflation and managing Nigeria’s monetary policy in the interest of Nigerians, stating that the redesign of the Naira is not political, but aimed at giving CBN control of the amount of currency in circulation, and to enable it to manage inflation and tackle counterfeiting of the Naira notes.

In his statement he said;

These challenges primarily include Significant hoarding of banknotes by members of the public, with statistics showing that over 85% of currency in circulation is outside the vaults of commercial banks. To be more specific, as of 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.

While responding to other questions, the governor said the central bank will reduce the volume of N500 and N1000 notes in circulation claiming the effort is aimed at curbing the inflation rate, which he relatively blamed on the higher-denominated Naira notes, sighting the UK as an example. He said;

In the UK they have a denomination in 50 pounds, but the most spent denomination is 20 pounds. Nobody spends 50 pounds. If you go around carrying 50 pounds in the UK they will suspect sic report you in fact.

The reverse is what is happening in Nigeria. Nigerians want to carry N500 and N1000. And in fact, we are beginning to think that increasing the highest denomination is also part of what is fueling inflation. So in fact, yes, we will launch N200, N500, and N1000 over time we will reduce the volume of N500 and N1000 in circulation. Let people carry N50 around.

He went on to say that to make up for the unavailability of the higher denominations will be embracing electronic banking solutions as the better alternative

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 Responding to concerns about Nigerians in the rural areas, especially as the timeframe for submission of the old note is short, Mr Emefiele said the central bank has made provision for easy exchange, reassuring that the apex bank is working with relevant agencies in the financial system in its execution, particularly in making sure that vulnerable citizens are not disadvantaged in any way as regards the redesigning of the Naira. He, however, reinstated that 100 days was more than enough time for people anywhere in the country to take their old Naira to the banks or mobile money agents scattered around the country. 

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