Experts react to CBN’s plan to redesign Naira


The Central Bank of Nigeria, CBN, has commenced actions on redesigning of Nigeria’s currency notes, the Naira, with a view to take control over the circulation and the integrity.

The Governor, Mr. Godwin Emefiele, who  announced this at a press briefing in Abuja yesterday,  said that the exercise would affect the upper denominations: 200, 500 and 1000 notes.

Explaining the rationale for the exercise, Emefiele said the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.

According to him the new notes will be released for public use on December 15, 2022.

He also said that the old notes and the new notes would circulate together until January 31, 2023 when the old notes would cease to be legal tender.

He further stated: “Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as 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 both the CBN and the country.”

The challenges, he said, included hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation is outside the vaults of commercial banks.

He said, “On the basis of 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.

“In line with this approval, we have finalized arrangements for the new currency to begin circulation from December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023 when the existing currencies shall seize to be legal tender.

“Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks in the order of First-come-First-serve basis.

“Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them withdraw the new banknotes once circulation begins in mid-December 2022. All banks are therefore expected to keep open, their currency processing centres from Monday to Saturday so as to accommodate all cash that will be returned by their customers.

“For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect. Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts.

“Members of the public are to please note that the present notes remain legal tender and should not be rejected as a means of exchange for purchase of goods and services.”

Experts cast doubt

Commenting on this development, former Economic Adviser and Chief Executive Officer of National Planning under President Olusegun Obasanjo, Prof. Magnus Kpakol, said that the exercise would come at a cost, adding, however, that the apex bank must have considered the cost of the change to the economy.

His words, “It will certainly come at a cost. Obviously, the bank must have considered this and concluded that the cost of the exercise is less than the cost of the current situation to the economy.

“Re-designing the currency is not bad and certainly the CBN must have reasons for the decision which could be monetary and even from the executive side.

“It could be targeting those who have stashed a lot of cash and may want to use it to put pressure on the currency at the foreign exchange market or who may want to compromise the forthcoming elections. 

“As you know, elections are coming and it is possible for some people to want to buy up dollars because of the uncertainties that come with elections or those who could have starshed cash just to compromise the process or the electorate.  This will have impact on them.”

Currency crowding

Reacting, Prof. Uche Uwaleke, President, Association of Capital Market Academics of Nigeria (ACMAN), said: “I think the decision to replace some naira denominations with new ones will be positive for the economy in the medium to long term.

”First, although the measure does not amount to demonetization of big currency notes often carried out by Central banks to curb black money and corruption, it will go a long way in ensuring that a lot of naira notes circulating outside the banks are crowded in.

”If it leads to large deposits in banks, it means the banks will have more money to lend which may reduce interest rates. I also think it may have the effect of reducing speculative attacks on the naira in the parallel market. I expect that the Financial Intelligence Unit will be on the watch out for huge deposits as a way of monitoring illegitimate transactions.”

Suck back currency outside vaults

Reacting, Tajudeen Olayinka, CEO Wyoming Capital and Partners, said: “ I think CBN is trying to systematically suck back into the banking system, that quantum of money that is currently outside the vaults of banks, estimated at 80% of money in circulation. Doing so, CBN will be able to eliminate counterfeit bank notes and reduce the quantum of illegal money/proceeds of crime that are possibly adding up to challenges of inflation.

‘‘As a matter of fact, CBN is attempting to use the new policy as a strategic weapon to controlling inflation. What will happen?  More people and businesses will resort to the use of electronic money, by directing their customers and counter-parties to pay transactions’ money directly into their bank accounts, to eliminate the risk of receiving counterfeit money.

‘‘Those holding illegal money would attempt to buy foreign currencies in the black market, but might be required to deposit Naira equivalent at the banks which could expose the source of the money they are exchanging because of disclosure requirements.”

Blow on illegal Naira

Reacting, analyst and Vice Executive Chairman , HighCap Securities Limited, said: “ I am yet to know CBN’s justification for this action. Several speculations are floating around but the shocking move appears to be an attempt to ascertain the volume of those notes in circulation and probably deal a blow on those dealing illegally in them.

“If my speculation is wrong, merely redesigning a currency is not likely to change its value. The inflation ravaging the Naira now which is diminishing it’s value is as a result of scarcity of forex, goods and over creation of the currency by CBN.”

The cost of redesigning and printing the new notes will be another dent on CBN’s balance sheet which will also deplete the country’s forex reserve. The exercise may just be a costly motion without movement and a futile rescue mission.”

No tangible effect on economy –Ikuomola

Speaking on the development, Executive Director, Technical, Anchor Insurance Limited, Mr. Adebisi Ikuomola, said that the he doesn’t see the development having any tangible effect on the economy or strengthening the naira.

He said: “The CBN said that the move is geared towards reducing the volume of naira in circulation, however I don’t see how that can positively affect the economy or strengthen the naira. The naira is weak in the foreign exchange market and this policy may not turn that around.

“However, this development could cause panic among Nigerians as many of them will be scampering to the banks to change their old notes. Consequently, the banking halls that have seen some level of calm in terms of customer congestion could see a beehive of crowds in the coming days.”

It’s a profligate exercise – Muda Yusuf

In his reaction, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, describe the planned move by the apex bank as embarking on a profligate exercise and a distraction.

His words: “It is difficult to see any compelling value proposition of this currency redesign idea. The cost of such an action would be outrageous and disproportionate compared to the expected benefits advanced by CBN.

“At a time when the government is grappling with high fiscal deficit, debt crisis, severe revenue crisis and underfunding of many government projects and programmes, it is most inappropriate to embark on such a profligate exercise.

Currency as a percentage of money supply is less than seven percent. The exercise therefore has no monetary policy significance. Besides, it will come with huge logistics costs and avoidable dislocations to small businesses, most of who are in the informal sector.

“This is one intervention we can do without. There are more urgent issues demanding the attention of CBN. We have issues with liquidity in the foreign exchange market, the depreciating currency the recent Moody’s downgrade of Nigeria, soaring inflation and many more.

“The CBN should save the citizens and the economy the trauma of this currency redesign. It is a distraction we can do without.”


New mag

Newswire Law and Events Magazine is Out. It's a collector's item. Get one - or two,or more - for yourself and loved ones.

Do you want to be heard, your events covered, your articles published, or need to advertise your products and services on our Blog and Magazine, reach out to us at Newswire Law and Events, you will be glad you did. For more details about our services, please call: 08039218044, 09070309355. Email:


Please enter your comment!
Please enter your name here