Governor of Central Bank of Nigeria, Mr Godwin Emefiele yesterday accused some bank executives of sabotaging the efforts of the apex bank on the supply of new naira notes thereby creating scarcity of the new notes. Addressing a press conference yesterday, Emefiele said some of the unscrupulous bank officials who were involved in the sale of the new notes have been arrested by security agents and will face trial.
According to him, “as the new deadline approaches, please permit me to express our sadness over the unscrupulous and unpatriotic conduct of some of our colleagues in the banking industry, whose greed and malevolence are sabotaging the CBN’s efforts. I assure you all that the enforcement agencies are on the trail of these unpatriotic colleagues and their collaborators.
“A few of them involved in the sale of the new currency have been arrested by EFCC, ICPC and indeed the DSS; and let me assure all Nigerians that these unscrupulous persons shall face the full wrath of the law. On our part , let me assure all that the CBN possesses the capacity, manpower, and equipment and grit to produce and circulate the new notes and are doing all in our power to ease the inconvenience on all Nigerians, particularly the vulnerable Nigerians.
“I want to use this opportunity to once again emphasize that this policy is not targeted at anyone or any group of persons. Rather it derived from our in-house analysis to strengthen our macroeconomic fundamentals and better our socio-economic conditions.
“Let me state and sadly too, that we have observed some incidences of widespread hoarding and predatory activities of some vendors. We appeal to those involved in these nefarious activities to please desist from such practices. This is because, these actions if left unchecked could derail the achievement the objectives of the naira redesign policy.
Hoarding – We have noticed that some members of the public are hoarding the new notes thereby restricting their flow through the economy. Cash kept at home will not circulate but may fuel a perception of scarcity which leads to higher demand for the currency, signalling to those who don’t have an urgent or immediate cash need to store cash. The CBN would like to encourage the public to use alternative channels as much as possible for their transactions and hold minimal cash in line with the cashless policy.
Panic Queues – The CBN has also noticed long queues at some bank ATMs and banking halls. Whilst some of these withdrawal requests are genuine and DMBs continue to load the ATMs only with new notes, monitoring suggests that there appears to be some opportunistic and panic queuing. The Bank wishes to reassure the public that the new notes are available for all who need it at the appointed time. There is no need to queue for new notes if you have alternative channels of payment and don’t have an emergency cash need. We reiterate that the new redesigned notes are more than enough to go round for legitimate needs.
Damage of Bank Branches & Assault of Bank Personnel – It has also come to our notice that at some branches, customers have become aggressive, verbally and/or physically abusing bank staff. They have also damaged or destroyed bank property, premises, and assets. We enjoin Nigerians to be peaceful and law abiding when they visit bank branches as this wanton destruction will be counterproductive, reducing the number of financial access points in these communities.
Incidences of Economic Opportunism – We have also noticed that some Nigerians are capitalising on the transition to charge exorbitant fees or demand cash payment on the false pretext that POSs don’t work, especially at petrol stations. These selfish actions for personal monetary gain is creating hardship for Nigerians and may come at the expense of fellow citizens lives and livelihood.
The CBN reiterates the availability of an appropriate amount of currency (redesigned N200, N500, and N1,000 denominations and current N100, N50, N20, N10 and N5 denominations) to support economic activities.
The Bank is collaborating with entire financial ecosystem DMBs, OFIs, MMOs, Super Agents, MFBs Payment System Providers and EFCC, ICPC and other law enforcement to ensure that Nigerians have a variety of options for financial transactions either through electronic channels or in exceptional circumstances, cash.
We are mindful of the challenges some citizens have faced and are addressing them. There have been reports of occasional failures in e – channel platforms. Our monitoring suggests that whilst there has been an expected surge in electronic transactions, these have not risen to unprecedented levels and the payment system is well equipped to handle even higher transaction volumes. Whilst transaction failures are bound to occasionally occur, the public is encouraged to have full confidence in Nigeria’s globally recognised payment system infrastructure. Banks have also been instructed to ensure 24/7 service availability and promptly address any customer refunds arising from such service failures.
We call on all Nigerians to be calm, law abiding, and considerate of their fellow citizens (particularly the vulnerable and weak) in the conduct of their affairs as we execute this policy of national significance. As with all far reaching consequential policies, there is an transition period during which short term hiccups will be inevitably experienced but eventually overcome.
The CBN is committed to ensuring a seamless, inclusive and equitable implementation of this exercise for the overall benefit of the people, financial system and Nigerian economy as a whole.
The advantages of the currency redesign are overwhelmingly enormous which will benefit the economy in the long-run. We will take all the necessary steps to ensure that there will be a smooth flow of currency swap and minimize the inconvenience in the short-term.
Nigerians should be calm
“At this time that we’re trying to get the currency to circulate there should be a queuing arrangement and please be patient. The assurance we give is that it would eventually go around. Eventually, the limits would be raised and the limits would be removed and people would be able to conduct their exchanges and businesses in the way it has always been in the past. We are appealing. Please we understand the pain. I’ve received several calls myself. Some members of my family themselves have complained. They will all have to just please show some understanding. It does not mean that when you queue and it does get to you, you do not begin to descend to wanton destruction of bank properties.
“At this time that we’re facing this temporary and transient situation, we crave everybody’s understanding. Please be calm. We are monitoring all institutions on 24/7 both cash channels and electronic channels. I’m appealing in God’s name that please let’s be calm, let’s take things easy.”
Ruling out the possibility of further extension of the deadline on legal status of the old bank notes, Emefiele said: “On the clamor by people to move the deadline by one more year or if we are open to further extension of the deadline. I would say no. I’m sure that people are going to say that only last week Tuesday, I said no, but I want to say unfortunately again, this time, we will not be looking at an extension of deadlines. Because we at the central bank, the deposit money banks, and other very important stakeholders, we are looking at areas where there is pressure and we are doing everything possible to address those areas of pressure.
“And we have had cases where in some areas, some bank branches had some cash in their vaults because there was no demand for them. Central Bank officials, when reported, we moved those monies from those locations and moved them to areas where there is pressure.
“So those are some of the logistical challenges that we face and we are doing everything possible to address it. “So I am not going to make any promise to anyone that there will be any further extension of this deadline.”
Benefits of a currency redesign policy
“Generally, currency redesign policies (sometimes called demonetization policies) are designed by countries to strengthen the performance of key macroeconomic parameters and equally combat social improprieties. Chiefly, it is expected to reduce the amount of cash in underground or illicit economy, truncate the activities of racketeers, and obliterate rent-seeking businesses in the black market. By reducing currency outside banks, it will shrink money stock and accordingly lower the long-run path of inflation. The ensuing deflationary pressure could elicit interest rate cuts that will in the short- to medium-term boost economic activities, spur aggregate demand, and enhance output growth.
The macroeconomic impacts of currency redesign are multidimensional and could seem uncertain especially at this early stage when its inconvenience is widespread.
By spurring more people to use bank accounts, this policy will further increase bank account ownership and increase the use of accounts by enhancing people’s saving behavior. It could encourage some hitherto informal business operators to formalize the pattern of transactions and adopt more formal settlement channels.
In addition, the short-term decline in cash holding and the increased formalization of business activities as the cashless policy forces more economic agents to open bank accounts, will also boost fiscal policy. With more transactions going through e-channels and bank accounts, more agents come within view of the government’s tax net. This enlarges the base of taxable activities and increases the possibility of more tax receipts by various tiers of government. In the long-term, the policy improves the sophistication of tax collection and would no doubt reduce tax evasion and tax avoidance.
As experiences from other jurisdictions have shown, effective currency redesign can support regulatory reform, increased legislative reach and coordinated fiscal and structural policies.
In summary, the general benefits of a currency redesign include:
•Reduction of Broad Money Supply: Effectively implemented currency redesign large causes a fall in money supply. This will lead to reduction of value of money in circulation and a deceleration of the velocity of money in the economy leading to less pressures on domestic prices.
•Lowering Inflation: the policy is typically expected to cause deflation in the market as less cash holding reduces currency outside banks and retards money