Redesigned Naira notes will enhance security – CBN

The Central Bank of Nigeria (CBN) has said that the redesigned N200, N500 and N1000 banknotes will have enhanced security, greater durability, attractiveness and Nigeria’s rich heritage.

The Governor CBN, Godwin Emefiele who stated this in a keynote address during the official launching of the new Naira banknotes said the benefits of the currency redesign to the Nigerian economy are enormous.

According to him “the policy will help to control inflation as the exercise will bring the hoarded currency into the banking system, thereby making monetary policy more effective; it will also help with better design and implementation of Monetary Policy as we would have much more accurate data on money supply and monetary aggregates.

“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”

Emefiele stated that the currency redesign would assist in the fight against corruption as the exercise would rein in the higher denomination used for corruption, and the movement of such funds from the banking system could be tracked easily.

READ ALSO: Naira Redesign: No going back on January 31, 2023 deadline – CBN

The CBN Governor however said that in recent times, 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.

Some of these challenges primarily include: 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.

He explained that this statistic shows that 84.71 percent of currency in circulation are outside the vaults of commercial banks, with only 15.29 percent in the Central Bank and Commercial banks’ vaults.

Other challenges include the worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability and there is increasing ease by criminals and risk of counterfeiting evidenced by several security reports received at the Central Bank of Nigeria.

He said 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 almost 19 years.