By Adedapo Adesanya
The Central Bank of Nigeria (CBN) will slowly but surely phase out old N200, N500, and N1,000 notes with the redesigned ones, according to the Acting CBN Governor, Mr Folashodun Shonubi.
The apex bank head gave this response while fielding questions on Tuesday after the bank’s Monetary Policy Committee (MPC) meeting in Abuja.
At the end of the two-day bi-monthly meeting, the apex bank raised the Monetary Policy Rate (MPR) by 25 basis points from 18.5 per cent to 18.75 per cent. At the same time, it adjusted the asymmetric corridor to +100/-300 from +100/-700 and retained the Cash Reserve Ratio (CRR) at 32.5 per cent, and the liquidity ratio at 30 per cent.
“When a currency is printed and sent out, it is expected that it will go through a number of cycles, and then over time, will become one and then be replaced. That’s what we’re doing.
“We had to put out or re-put out old notes. And as they’re coming in, they’re being processed and returned to us as not issuable. We are then bringing out and replacing them with the new notes,” Mr Shonubi told newsmen yesterday.
He also said there is an optimal level of currency currently in circulation, and the CBN is slowly replacing worn-out notes with new ones.
“We believe that we have an optimal level of the currency out there, and so much of what’s being done is the replacement to keep the level, rather than just putting money out there,” he said.
“And that is seen by the fact that the banks, whenever they come to us for notes, we provide it to them. If it wasn’t enough, they would be asking us for more. If it was too much, they’d be dumping that much more on us.
“So, we will slowly, and over time you will see the old notes replaced out of the system with the new notes that’ll be the norm.
“And that will be out of practice, not fanfare; you’ll just see it slowly morph from old to new,” he added.
In October 2022, the CBN announced the redesigning of N200, N500 and N1,000 notes and gave a target of January 31, 2023, to end the use of the old Naira notes.
This created hardship for Nigeria, spurring three state governments – Kaduna, Kogi, and Zamfara – to sue the federal government at the Supreme Court for a reversal of the policy. It was later joined by 13 other states, including Lagos.
On March 3, the Supreme Court ordered the immediate recirculation of the old naira notes ruling that the old N200, N500, and N1,000 notes be used as legal tender till December 31.
This was met with no quick action as erstwhile President Muhammadu Buhari distanced himself from the CBN governor and the Attorney General of the Federation (AGF), noting that “at no time did he instruct the Attorney General and the CBN Governor to disobey any court orders involving the government and other parties.”
Ten days after the court decision, the CBN, on March 13, 2023, finally announced the continued use of the old N200, N500, and N1,000 banknotes as legal tender alongside the new naira notes until December 31, 2023.
