The Central Bank of Nigeria (CBN) on Sunday reiterated its commitment to the seamless implementation of the naira redesign project to achieve its fundamental objectives.
It also pledged to shield vulnerable Nigerians from any negative impact that may arise from the execution of the project.
It also noted the positive response of the banking public to the policy through increased currency deposits across banks and other financial institutions.
In addition, it noted that the progressive increase in financial access points and alternative banking channels including electronic/internet banking, mobile apps, ATM, Cards/PoS, eNaira, agent banking, among others, may not be evenly distributed across all geopolitical zones and in some rural areas.
In this regard, the central bank said it was collaborating with relevant agencies and other stakeholders in the financial system in the execution of the redesign policy to particularly ensure that vulnerable citizens are not disenfranchised.
The CBN explained that the banking public in rural and/or underserved areas may access CBN branches in the 36 states of the federation to enquire about options for depositing their current N200, N500, and N1,000 notes, wallet/account opening processes, financial access points among others.
It stated that due to the policy, the agents have also been accorded priority to enable them to deposit cash collections through bank branches across the federation.
The bank also restated its commitment to continue to monitor developments and issue updates to the banking public on the implementation of the naira redesign policy as may be necessary.
President Muhammadu Buhari last week declared that his government would not go back on the planned redesign of the banknotes. The president, who spoke in London, had said the policy announced by the CBN Governor, Godwin Emefiele last month has come to stay.
“No going back,” Buhari had said of the decision to redesign the three naira notes.
The president said enough time had been given by the CBN for Nigerians to deposit the present naira notes at banks in exchange for the newly redesigned ones which would be issued by December 15, 2022.
His words: “On this change of currency, there will be a lot of money but time has been given from October to December, three months is enough for whatever money you have, to get it changed through the legal system. So, I don’t know why people are complaining about it.”
The central bank had urged Nigerians to support the currency redesign project which is in their overall interest and the economy at large.
The bank had further insisted that it followed the law and due process to carry out the redesigning exercise, which is 12 years due.
Emefiele had on October 26, announced a redesign of the currency in the variation of N200, N500 and N1,000.
The CBN governor, who pointed out that the change was sequel to the approval of President Muhammadu Buhari, said circulation of the new banknotes would commence on December 15, 2022.
He said the development was also aimed at checking the increasing ease and risk of currency counterfeiting evidenced by several security reports, and the increased risk to financial stability as well as the worsening shortage of clean and fit currency, with the attendant negative perception of the central bank.
Emefiele had said there was significant hoarding of naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation was outside the vaults of the commercial banks.
He said as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable.
Emefiele explained that the new and existing notes would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender.
As a result, he said all banks currently holding the existing denominations of the currency might begin returning the notes to the CBN immediately, adding that the newly designed currency would be released to the banks on a first come, first served basis.
The CBN governor also urged bank customers to begin paying into their bank accounts the existing currency notes to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.
He said all banks were expected to keep open their currency processing centers from Monday to Saturday so as to accommodate all cash that would be returned by their customers.
The CBN governor also said for the purpose of the transition from existing to new notes, bank charges for cash deposits had been suspended with immediate effect. He added that no bank customer should bear any charges for cash returned/paid into their accounts.
The CBN boss had emphasised that in the meantime, the present notes remained legal tender and should not be rejected as a means of exchange for the purchase of goods and services. He had reassured the 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.
Further providing the rationale for the apex bank’s decision, Emefiele said there had been concerns about the management of the current series of banknotes as well as currency in circulation, particularly those outside the banking system in the country. He said currency management remained a key function of the CBN, as enshrined in Section 2 (b) of the CBN Act 2007.
He stressed that the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy were some of the hallmarks of a great central bank.
Emefiele pointed out that in recent times, currency management had faced several daunting challenges that had continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.
He said recent developments in photographic technology and advancements in printing devices had also made counterfeiting relatively easier, stressing that in recent years, the CBN has recorded significantly higher rates of counterfeiting, especially at the denominations of N500 and N1, 000 banknotes.
Emefiele had explained, “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 N200, N500, and N1,000 levels.”
He added, “So first of all, what we want to do is mop up the N3.2 trillion back into the CBN so we can take control of the money supply. Again, this would help to rein inflation and it would have a positive impact on inflation.”
On the concerns for people in rural areas following the currency redesign, Emefiele said, “It would impact on the people in the rural areas, particularly those who do not have bank accounts and that is the reason I said in a session on the anniversary of our eNaira, that we would be introducing a number of tokens where people in the rural areas who don’t have a bank account should be able to conduct banking services without having a bank account.
“However, if you are carrying cash, you can go to the nearest bank branch near you, they will take your cash and open an account for you for the purpose of returning the old naira into the banks’ vaults and then collecting the new naira.”
The CBN governor also said, “We are going to continue fine-tuning this programme to see to it that it is in the interest of more Nigerians, we don’t want to make life more difficult for Nigerians.
“But you all must agree that the trend of lots of money in circulation out of the bank vaults is unacceptable, you can imagine, doubling the size of naira in circulation from N1.46 trillion in 2015 to N3.23 trillion in September 2022 is unacceptable and it takes the control of money supply out of the hands of the central bank.”
James Emejo in Abuja and Nume Ekeghe in Lagos