Experts Speak on Redesigning Naira Notes As FG Announces Six New CBN Requirements

• Financial experts and economists have weighed in on the CBN's decision to redesign Naira notes
• Why some thought the move was brilliant, while others questioned the timing of the CBN decision
• The federal government has issued six new CBN requirements ahead of the December 15 deadline

Economic experts in Nigeria have shared their opinions on the Central Bank of Nigeria's (CBN) move to redesign four of the eight currency notes in circulation.

Legit.ng reported that the CBN Governor Godwin Emefiele, on Wednesday, 26 October 2022, announced the plans to redesign the N100, N200, N500 and N1000 notes.

According to Emefiele, the move was to address currency hoarding by the members of the public, reduce counterfeiting, make available more clean notes and stop currency mutilation.

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Expert speaks on new Naira notes

Since the CBN'sannouncement, Nigerians and leading economists have shared divergent views on the new naira notes, the Punch reports.

Speaking on the CBN's decision Prof. Umhe Uwaleke, University of Keffi, believe the decision will be positive for the economy in the medium to long term.

According to Uwaleke, the measure would go a long way to ensure that the naira in circulation outside the banking system was brought into the banking system.

Also, former deputy CBN governor Kingsley Moghalu praised the CBN for taking such a bold move.

According to him, If 80%of banknotes in circulation are outside the banks, that's troubling.

Experts not too happy

However, a financial expert, and past President of the Chattered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, said redesigning the naira was not the most important problem facing the economy.

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This view was also shared by Bismarck Rewane’s Financial Derivatives Company which said that due to the timing of the project, at a festive period coupled with the approaching general elections, GDP or output could be affected.

In a note to investors, Rewane said:

"To the extent that economic agents especially market women in the middle of December will be constrained to exchange goods for a currency that will cease to be legal tender in 45 days.

"It could discourage them from accepting the old notes and therefore will reduce aggregate demand and affect the supply of goods. In other words, it could lead to a fall in GDP and output."

An expert believes the timing of new notes wrong

Ayo Teriba, chief executive officer of the Economic Associates, also queried the timing and relevance of the new CBN policy.

He says replacing old currency notes with new ones is a routine exercise that central banks make no noise about.

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He added that Old notes are gradually replaced with new ones once they get back into the banking system.

His words:

"Proposing a sudden withdrawal of notes for replacement with redesigned notes is of no benefit to the country, but will come at huge costs.

"Fixing the deadline two to three weeks ahead of Christmas/New Year festivities, two months ahead of a general election, is as disruptive as it is insensitive.

"It is sheer waste of the nation’s time and resources to be re-designing the N100 (equivalent to $20 cents) to N1000 (equivalent to $2) as these are ripe for replacement with naira coins to make room for the immediate introduction of N2000 (equivalent to $4) to N10,000 (equivalent to $40) denominations of Naira notes that will be more in line with the value of currency note circulating in other climes."

FG gives CBN conditions

In another development, the federal government has listed requirements for CBN to begin the distribution of the new naira notes.

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According to Zainab Ahmad, minister of finance, budget and planning, there are conditions to the currency redesigning policy of the CBN.

The new conditions include that banks must only accept cash from customers with full KYC and bank accounts; cash must only be paid into customers’ accounts; cash must not be paid into ledgers or suspense accounts; CBN and Economic and Financial Crimes Commission (EFCC) will be tracking all deposits, and that old currency will become useless on January 31, 2023.

She also said on her LinkedIn handle that the CBN will no longer print large quantities of cash as a new cashless policy will be announced in January, as banks that receive cash from non-account holders or customers will be penalised by CBN and EFCC.

Banks release names, BVNs, and addresses of 1,000 customers involved in forex scam

Meanwhile, commercial banks have revealed more names of Nigerians who buy dollars cheaply using visa to sell at the black market for a low price

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Some banks have removed previously published names, while others have added many more

This is in accordance with CBN directives to reveal the identities of customers involved in forex fraud

Source: Legit.ng