A self acclaimed financial expert on Twitter has said the wealthy in the society will suffer most from the CBN’s plan to redesign some naira notes.
Recall the CBN Governor Godwin Emefiele has announced plans to redesign, produce, and circulate new series of banknotes at N100, N200, N500, and N1,000 levels.
He cited increased counterfeiting of notes as one of the reasons for opting for a newer set of notes which will be manufactured with more modern technology.
A twitter expert has now said that the wealthiest in the society have been hoarding naira and would be forced to bring them all out lest it becomes worthless when the new notes arrive.
He wrote:
The idea by the Central Bank of Nigeria to introduce a new designed Naira note by mid December 2022 is a strategic fiscal policy. Naira will gradually regain its strength because it appears Naira are being stacked in private vaults owned by the powerful class and sold to FX operators at the detriment of other Nigerians.
This one important announcement will force them to bring out the stacked Naira out from their vaults to the bank, otherwise they will lose them completely. Now I get the gist when Buhari said Nigerians will appreciate APC govt before his administration ends. That money they keep for election in their vaults will have to pass through CBN before they can use it again. Congratulations to Nigeria!
Below is the press statement by Emefiele:
PRESS REMARKS BY GOVERNOR GODWIN EMEFIELE ON ISSUANCE OF NEW NAIRA BANKNOTES
Good afternoon Ladies and Gentlemen, and welcome to this special press briefing of the Bank. We have called this gathering to inform relevant stakeholders and the general public of persisting concerns we are facing with the management of our current series of banknotes, and currency in circulation, particularly those outside the banking system in Nigeria.
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. These challenges primarily include:▪ Significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are outside the vaults of commercial banks;
▪ Worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability;
▪ 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. Although global best practice is 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. 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 N100, 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. We would like to use this opportunity to reassure the general public 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. I thank you for listening.
Godwin I. Emefiele
Governor
