Naira redesign to control inflation, assist in fight against corruption, says Emefiele

The governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele on Wednesday in Abuja said the redesigned denominations of N1,000 , N500 and N200 will control inflation rate and assist the Federal Government in fighting corruption.

Emefiele at the official unveiling of the new naira denominations alongside President Muhmmadu Buhari at the State House, added that the redesign policy of the CBN “will help with better design and implementation of Monetary Policy as we would have much more accurate data on money supply and monetary aggregates and we believe that this exercise would help in increasing financial inclusion, moving towards a more cashless economy, and ensuring greater formalization of the Nigerian economy,”

He said the launching of the new Naira banknotes marks a major milestone in the apex bank’s efforts to solve the numerous challenges facing the management of legal tender currency with the unveiling of the three redesigned denominations.

According to him, currency management is a key function of the CBN, as enshrined in Section 2 (b) of the CBN Act 2007, stressing that 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.

He noted that currency management in Nigeria has faced several challenges that have continued to grow in scale and sophistication with unintended consequences for the integrity of both the CBN and the country.

“First, a significant hoarding of banknotes by members of the public, with statistics showing that N2.72 trillion out of the N3.26 trillion currency in circulation as of June 2022 was outside the vaults of commercial banks across the country, and supposedly held by members of the public. This statistic shows that 84.71 per cent of currency in circulation are outside the vaults of commercial banks, with only 15.29 per cent in the Central Bank and Commercial banks’ vaults.

“Second, is the worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability;

“Third, there is increasing ease by criminals and risk of counterfeiting evidenced by several security reports received at the Central Bank of Nigeria,” Emefiele said.

He noted that 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 almost 19 years.

“On the basis of these trends, problems, facts and benefits of currency redesign, and in line with Section 2(b) Section 18 and Section 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.

“After obtaining Mr President’s approval, the CBN directed the Nigerian Security Printing and Minting Company to begin printing the new banknotes. The redesigned N200, N500 and N1000 banknotes will have the following features: enhanced security;  greater durability, attractiveness and our Rich Heritage

“The ability of the Central Bank of Nigeria to initiate sound policies that positively impact Nigerians and support economic growth, such as the currency redesign policy, is due to the independence of the Central Bank,” he said.

He emphasized that the independence of the CBN, although codified in the law, would not have been possible without the full support of President Buhari who has made the policy initiative possible and successful.

He added: “Indeed , Mr President, only President of your esteemed and incorruptible stature could have done what we are witnessing today. We say this because instead of redesigning in 5 to 8 years , we delayed for almost 19 years. And for this, we are exceedingly grateful, Mr. President.

“”Most importantly Mr President, in order to test the capacity of the Nigerian Security Printing and Minting Company, you insisted that the first set of these currencies MUST be printed in  Nigeria. We thank Mr President for your unflinching confidence in the Nigeria Mint. We also thank the Staff and Management of NSPMC for living up to expectation by working tirelessly to actualize Mr President’s directives to print locally.”