THE Central Bank of Nigeria’s (CBN) redesigning of select currency notes of N200, N500 and N1,000 would come at a huge deficit cost to the economy, according to sector experts.

The government is struggling with a huge debt deficit and would likely borrow massively to fund the currency redesigning, which, the experts argued, would deepen inflationary pressure on Nigeria’s currency.

The CBN had on Wednesday October 26 disclosed its plan to redesign the naira, citing concerns of “illicit” funds in circulation, which it said bandits and kidnappers had been exploiting in perpetrating their crimes.

The apex bank will be introducing the redesigned notes into the financial system on December 15, 2022, and has given January 31, 2023 as the expiry date for legal tender of the notes being rested.

The bank’s governor, Godwin Emefiele, told journalists in Abuja at a briefing that the redesign move was informed by, among other reasons, concerns over significant hoarding of banknotes by some members of the public.

According to Emefiele, statistics had shown that over 80 per cent of currency in circulation were outside commercial banks’ vaults, which was fuelling illicit financial flow within the economy.

He further noted that worsening shortage of clean and fit banknotes, with its attendant negative perception of the CBN, had increased risk to financial stability.

He stressed that increasing ease of counterfeiting had been evidenced by several security reports at his privy.

What the decision means to Nigerians

The redesigning decision is not unexpected to trigger economic dislocation – especially considering the short time frame – and trigger rush by the people to banks to dispose of old notes, as well as withdrawal runs at automated teller machines immediately the new notes come into circulation.

It is feared that rural dwellers who live far from where banking services are available would experience hardship dumping the old notes, as well as, initially, obtaining the new ones.

Some financial analysts are expecting the coming experience to bring more traditionally unbanked people into the banking system.

READ MORE HERE: https://www.icirnigeria.org/here-are-ways-redesigning-the-naira-notes-will-affect-you/

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