The Central Bank of Nigeria (CBN) says the naira redesign programme of federal government is to lower inflation rate among other objectives.
Godwin Emefiele, the CBN governor, said this on Tuesday while briefing members of the diplomatic corps on the redesign of naira notes in Abuja.
“The policy is typically expected to cause deflation in the market as less cash holding reduces currency outside banks and retards money circulation.
“The accompanying decline in money supply will thus slow pace of inflation.
“As you can see, we have started to witness inflation trending downwards, following general price stability in almost all genre of markets including for goods and financial products.
Emefiele said that the policy had also had positive impact on the naira exchange rate,
“Prior to the announcement of the policy, the huge cash haul outside the banking system had exerted significant pressures on the exchange rate at all windows, but more so at the parallel market as it engendered asset substitution by speculators, and rent-seekers.
“While the policy was initially estimated to lead to more speculations due to panic moves as most people try to understand the policy action, it is expected to reduce speculation in the medium- to long-run.
“Today, the limited circulation of the new Naira notes has forced the hands of speculators and we are beginning to witness some stability,” he said.
Emefiele said that the CBN had identified the principal causes of the hardship in the implementation of the programme to include hoarding of new notes, tension and elevated agitations, panicky queues, panicky mop up of notes by politicians and incidences of economic opportunism.
“We have noticed that some members of the public are hoarding the new notes thereby restricting their flow through the economy.
“There is tremendous tension and elevated agitation by our leaders who should be calming frayed nerves by the citizens. We believe that a large proportion of these agitations are staged and sponsored propagandas or an exaggeration of the reality.
“The CBN has also noticed long queues at some bank ATMs and banking halls.
“Whilst some of these withdrawal requests are genuine, some are simply the reprehensible activities of miscreants who do not have the genuine intention of making a withdrawal, but are seeking quick-earnings by queuing up just to sell their spaces to make money.
“The CBN has also noticed that some politicians are buying the new notes and storing them for political purposes.
“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 are creating hardship for Nigerians and may come at the expense of fellow citizens lives and livelihood,” he said.
Emefiele, however, assured Nigerians of availability of redesigned N200, N500, and N1, 000 denominations and current N100, N50, N20, N10 and N5 denominations to support economic activities.
He said that the apex bank was working with the entire financial ecosystem to ensure that Nigerians had a variety of options for financial transactions either through electronic channels or in exceptional circumstances, cash.
“The CBN remains 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,” it promised.
