For more than two (2) decades, The Apex Bank (CBN) introduced several measures to protect the Naira from losing its value which if allowed will eventually lead to the depletion of the foreign reserve. After the introduction of the Structural Adjustment Program (SAP) in 1986, the Apex bank introduced several measures to curb the abuse of the Forex market among which are, Second Tier Foreign Exchange Market, Autonomous Foreign Market, Dutch Auction System and Wholesale Dutch Auction System. However, the afore mentioned programs could not be said to have achieve the maximum result as a result of limitations in both fiscal and monetary policies. The Naira continued to depreciate as time pass thereby prompting the Apex bank to take drastic measures.
Unscrupulous individuals who specialize in reaping the Naira apart in the past two decades have and some foreigners from Asia and recently West African counties have engaged in unauthorized transactions.
In the past few weeks, the Apex bank has been busy trying to stabilise the currency after it has reached N250 at the parallel market. The CBN has directed banks to henceforth reject Forex deposits into domiciliary accounts and other forms of un-approved Forex transfers. These have left banks with about $1 billion USD in their vaults.
In the past, two former CBN governors had tried to re-denominate the Naira but was face with outright opposition from the general public and as such, the presidents intervening respectively by overriding the decision of the CBN to re-denominate. In his effort to reintroduced the project, the former CBN governor brought back the idea of his predecessor and named it "Project cure" to restructure the naira and introduce N5,000 notes and the minting of N5, N10 and N20 as coins to aid business transactions mainly within the financial institutions. The introduction of higher denominations will not lead to inflation but rather, our disrespect for lower denominations resulted to the neglect.
It is said that the elites in the country resulted to using foreign currency in their dealings due to lack of higher denominations, as such, elites carry around hundreds of dollars in their pockets thereby contributing to the dollarization of the economy.
Therefore, in consolidating its fight to control the soul of Naira, should the CBN re-introduce Project Cure (higher Naira notes) in order to ease the huge demand for the Forex?