. Says N2.1trn successfully retrieved into banking system
By Clara Nwacukwu
President Muhammadu Buhari has approved the reintroduction of old N200 note as legal tender alongside the new N200 note until April 10, to further ease supply pressures on the people.
He informed that despite the initial setbacks, the currency redesign of the Central Bank of Nigeria has achieved a significant milestone as “about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved. This represents about 80% of such funds.”
This is sequel to his promise to speak on the policy after yesterday’s Supreme Court decision, which adjourned the suit brought by some state governments at the Federal Govern and the CBN. The Court adjourned further hearing on the matter to February 22.
Announcing the reintroduction in a national broadcast early hours today, the President said the CBN has been directed to release the old N200 bank notes back into circulation “and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes ceases to be legal tender.”
He added that “In line with Section 20(3) of the CBN Act 2007, all existing old N1000 and N500 notes remain redeemable at the CBN and designated points.”
He equally urged “every citizen to strive harder to make their deposits by taking advantage of the platforms and windows being provided by the CBN.”
Factors behind currency redesign
Buhari listed a few critical points underpinning the currency redesign policy decision, especially “The need to restore the statutory ability of the CBN to keep a firm control over money in circulation.”
He recalled that “In 2015 when this administration commenced its first term, Currency-in-Circulation was only N1.4trillion.
“The proportion of currency outside banks grew from 78%in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation.”
As a result, he said: “The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth;
“Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population; and
“Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria.”
He explained that the decision to reintroduce the old N200 banknote followed multi-level consultations with various stakeholders, including well-meaning citizens and institutions across the nation, and representatives of the State Governors as well as the Council of State.
The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth.
Additional gains
The President further argued that in the short to medium and long terms, there would be additional gains from the currency redesign policy such as:
- A strengthening of our macroeconomic parameters;
- Reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices;
- Lowering of Inflation as a result of the accompanying decline in money supply that will slow the pace of inflation;
- Collapse of Illegal Economic Activities which would help to stem corruption and acquisition of money through illegal ways;
- Exchange Rate stability;
- Availability of Easy Loans and lowering of interest rates; and
- Greater visibility and transparency of our financial actions translating to efficient enforcement of our anti- money laundering legislations.
Policy saboteurs
The President also gave thee CBN the power “to deploy all legitimate resources and legal means to ensure that our citizens are adequately educated on the policy; enjoy easy access to cash withdrawal through availability of appropriate amount of currency; and ability to make deposits.”
He said he is “not unaware of the obstacles placed on the path of innocent Nigerians by unscrupulous officials in the banking industry, entrusted with the process of implementation of the new monetary policy,” and sympathised with the public “over these unintended outcomes.”
To this end, the CBN was directed to “intensify collaboration with anti-corruption agencies, so as to ensure that any institution or person(s) found to have impeded or sabotaged the implementation should be made to bear the full weight of the law.
He assured that the government “will continue to assess the implementation with a view to ensuring that Nigerians are not unnecessarily burdened.”
“In this regard, the CBN shall ensure that new notes become more available and accessible to our citizens through the banks,” he added.
