Nigeria: CBN justifies issuance of new Naira notes, begins circulation December 15

The Governor of the Central Bank of Nigeria, Godwin Emefiele, has explained the reasons for the issuance of new redesigned Naira notes.

The Apex bank governor explained this during a special press briefing on Wednesday October 26, 2022.

According to the CBN governor, the decision followed the persisting concerns faced with the management of the current series of banknotes, and currency in circulation, particularly those outside the banking system in Nigeria.

“As you all may be aware, currency management is a
key function of the Central Bank of Nigeria, as enshrined in
Section 2 (b) of the CBN Act 2007,” Emefiele said.

“Indeed, 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 in recent times, currency management has
faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN
and the country.

Emefiele explained that the challenges primarily include
significant hoarding of banknotes by members of
the public, with statistics showing that over 80
per cent of the currency in circulation is outside the
vaults of commercial banks.

He added that another challenge is the worsening shortage of clean and fit banknotes, which poses
increased risk to financial stability.

Emefiele also maintained that in recent years, the
CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of
500 and 1000 banknotes.

“Although 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 the
last 20 years,” Emefiele 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 N100,
N200, N500, and N1,000 levels,” he stated.

The CBN governor further stated that the bank has finalized arrangements for the new currency to begin circulation from
December 15, 2022.

He said the new and existing currencies shall remain legal tender and circulate together until January 31,
2023 when the existing currencies shall seize to be legal tender.

He, therefore, urged all Deposit Money Banks currently holding
the existing denominations of the currency to begin
returning these notes to the CBN effective
immediately.

The newly designed currency will be released to the banks on the order of First-come-First-served basis.