It’s Common information that the Nigerian authorities selected a change of its 200, 500, and 1,000 naira notes. The Central Financial institution of Nigeria launched new banknotes in November 2022. The brand new notes got here into impact on 15 December 2022, the apex financial institution additionally capped the withdrawal of the brand new banknotes at N500,0000 per week for people, and N5,000,000 for firms. This now begs the query of what would occur to the previous naira notes.
The financial institution says the brand new banknotes are being launched to rein in counterfeiting, promote a cashless economic system by limiting the quantity of the brand new banknotes that may be withdrawn, cut back the big variety of soiled notes circulating within the economic system, discourage hoarding, curb crimes like kidnapping and terrorism, and head off illicit monetary transactions.
It additionally sees the coverage as a manner of addressing the massive quantity of forex exterior the formal monetary sector; 85% of banknotes flow into exterior the banking system, largely due to hoarding and illicit monetary transactions.
The introduction of the Financial institution Verification Quantity system, which requires depositors to have a novel quantity that might be used to find out who they are surely, has inspired criminals and cash launderers to function exterior the banking system. The circulation of huge portions of cash exterior the banking system, based on the Central Financial institution of Nigeria, makes it difficult to conduct efficient financial insurance policies.
Due to this fact, it's evident that the previous banknotes would regularly grow to be out of date however this may evidently take a while as Individuals have been given until 31 January 2023 to return previous naira notes to banks, central financial institution money workplaces, and different designated monetary intermediaries however the 38 million Nigerians (or 36% of the grownup inhabitants) who don’t have a checking account don't have any selection however to carry on to the previous notes as Banks don’t have sufficient of the brand new ones to trade for the previous ones.
In conclusion, it’s evident that plenty of Unbanked Nigerians who can’t deposit previous notes into an account could be stranded and left with plenty of out of date financial institution notes so to keep away from this dilemma, the central financial institution ought to permit the previous and new notes to coexist as authorized tender, whereas the previous is regularly phased out as It’s not simply the banks that don’t have entry to the brand new banknotes, peculiar Nigerians are struggling too.
The highest Central Financial institution of Nigeria officer who appeared earlier than the Nationwide Meeting to transient members in regards to the new coverage didn’t readily know what number of banknotes had been printed which factors to the dearth of planning for the implementation of the coverage. The financial institution wants to hold out due diligence in calculating the optimum amount of the brand new notes wanted to take care of stability within the monetary system. The previous naira notes are anticipated to be phased out by the tip of January 2023, however there are doubts that the financial institution will meet this deadline.
Though the central financial institution has launched into a sensitization train to guarantee the general public that issues can be wonderful, it ought to have carried out so concurrently with the announcement of the coverage.