In an attempt to reduce the volume of cash baggage and security exposure in cash transactions, the Central Bank of Nigeria may be contemplating the introduction of new currency denominations of N2,000 and N5,000.
The bank has also made plans to convert N5, N10, N20 and N50 into coins which are all presently notes.
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The policy would make it easier to move large quantities of cash around with little exposure to risk, but financial critics have suggested that it would be a contradiction to the CBN policy to migrate to a cashless economy.
Spokesman of the Central Bank Ugochukwu Okorafor, who spoke to LEADERSHIP SUNDAY, however, said he could not confirm that the bank’s governing board was thinking of introducing two new denominations in addition to the existing ones.
Okoraforwho made no outright denial that such a policy was being contemplated, said instead that he had to get further clarification from the bank’s leadership. And as at press time yesterday, the CBN spokesman was unable to reach any of the bank’s directors.
But a source who is a staff member of the bank told LEADERSHIP SUNDAY, under the condition of anonimity that, “The top management of the CBN have decided to introduce currency denominations of N2,000 and N5,000. This is being done in the best interest of the economy.”
The source who could not say when the policy would take effect or when it would be announced to the public said, “All the smaller denominations from the N50 downwards are also to be converted into coins.”
A financial expert and executive chairman of the Society for Analytical Economics, Nigeria, Dr. Godwin Owoh, has said that if the policy is carried out, it would not only lead to inflation but would increase the ability to carry out cash transactions.
He said the activities of the CBN were becoming more commercial in nature, suggesting that this was more of a fiscal policy than a monetary one and that it should be decided by either the minster of finance or the president.
Owoh said, “There has been no official pronouncement from the CBN on this policy but, if it is carried out, it will only give the bank’s management the capacity to award more contracts, making it a purely selfish and commercial endeavor. The CBN has been carrying out commercial activities, which are normal banking operations – they set rules on how to withdraw or not withdraw money.”
He said, “ The CBN has invested a lot into the cashless policy and point of sale terminals will suffer; 100,000 units of hardware for e- transactions have been installed in different places.
“The process of printing money is clearly a fiscal issue. Embarking on this policy would indicate a lack of harmony between the fiscal and monetary policies.”
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