Zainab Ahmed, the minister of finance, claimed on Friday that her department was not consulted before the Central Bank of Nigeria decided to redesign naira notes by December.
She revealed it in Abuja during the Ministry of Finance, Budget, and National Planning’s budget discussion. “Managing inflation is one of the reasons for the decision,” the minister added, “but there will undoubtedly be consequences.”
“No one consulted us. We heard an announcement, that’s for sure. The fact that it was one of the strategies to mop up liquidity to regulate inflation is one of the reasons it was supported.”
“However, there are also negative effects; we are currently examining these effects. While there will be some advantages, there will also be some difficulties. And I’m not sure if the monetary authorities have really considered the ramifications and how they’ll reduce them.”
The Central Bank of Nigeria said two days ago that starting on December 15, 2022, new designs would be introduced to replace high-value naira notes.
The bank claimed that it was taking these actions to regulate inflation, maintain control over the amount of legal tender in circulation, and combat currency fraud.
By redesigning the N100, N200, N500, and N1000 and beginning to issue them by December, it is intended to have phased out the old notes by January 31, 2023.
The governor, Godwin Emefiele, stated in a Wednesday press conference that the currency management has confronted a number of difficult problems that have grown in scope and sophistication, with repercussions for the CBN’s and the nation’s credibility.
“According to data, over 85% of the money in circulation is kept outside of commercial banks’ vaults, so one of the main problems is that the public hoards a lot of banknotes.”
“To be more precise, as of the end of September 2022, CBN figures reveal that N2.73 trillion of the N3.23 trillion in money in circulation was reportedly held by the general public outside the vaults of commercial banks across the nation.”
Additionally, he stated that the country’s scarcity of clean, suitable banknotes is getting worse, which has a negative impact on the public view of the CBN and raises the risk of financial instability.
