Good afternoon Ladies and Gentlemen, and welcome to this special press briefing of the Bank. We have called this gathering to inform relevant stakeholders and the general public of persisting concerns we are facing with managing our 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. Indeed, the integrity of a local legal tender, the efficiency of its supply, and its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.
In recent times, however, 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 the CBN and the country. These 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;
▪ Worsening shortage of clean and fit banknotes with the attendant negative perception of the CBN and increased risk to financial stability;
▪ Increasing ease and risk of counterfeiting evidenced by several security reports. Indeed, recent development in photographic
technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.
Although the 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. Based on 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.
Following this approval, we have finalized arrangements for the new currency to begin circulation on December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023, when the existing currencies cease to be legal tender.
Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may immediately return these notes to the CBN. The newly designed currency will be released to the banks on order First come-First serve basis.
Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins in mid-December 2022. Therefore, all banks are expected to keep their currency processing centres open from Monday to Saturday to accommodate all cash that their customers will return.
For this transition from existing to new notes, bank charges for cash deposits are suspended immediately. Therefore, DMBs must note that no bank customer shall bear any charges for cash returned/paid into their accounts.
Public members are to please note that the present notes remain legal tender and should not be rejected as a means of exchange for purchasing goods and services. We want to use this opportunity to reassure the general public that the CBN will continue to monitor the financial system and the economy in general and always act in good faith to achieve the Bank’s objectives and improve the country.
Thank you for listening.
Godwin I. Emefiele