CBN redesigns N200, N500, N1, 000 notes

• New bills out December 15, existing banknotes expire January 31 – CBN boss
• Halts charges for cash deposits to encourage transition

In an apparent move to tackle vote-buying and control the amount of money in circulation, the Central Bank of Nigeria (CBN) has announced a redesign of the currency in the variation of N200, N500 and N1, 000.

CBN Governor, Mr. Godwin Emefiele, who disclosed the resolve by the apex bank to redesign the banknotes at a media briefing in Abuja, said the redesigning of the notes would affect the N200, N500, and N1, 000 denominations.

Emefiele explained that the change was sequel to the approval of President Muhammadu Buhari, adding that the circulation of the new banknotes would commence on December 15, 2022.

The apex bank boss, said the development was also aimed at checking the increasing ease and risk of currency counterfeiting evidenced by several security reports, and the increased risk to financial stability as well as the worsening shortage of clean and fit currency, with the attendant negative perception of the central bank.

According to him, there was significant hoarding of naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation were outside the vaults of the commercial banks.

He described the development as unacceptable, adding that as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks,

He recalled that “on February 28, 2007, as part of economic reforms, N20 was issued for the first time in polymer substrate, while the N50, N10 and N5 banknotes; as well as N1 and 50 kobo coins were reissued in new designs, and the N2 coin was introduced.

“Also, on September 30, 2009, the redesigned N50, N10 and N5 banknotes were converted to polymer substrate following the successful performance of the N20 (polymer) banknote. “Finally, the CBN, as part of its contribution towards the celebration of the 50th anniversary of Nigeria’s Independence and 100 years of its existence as a nation, had issued the N50 Commemorative polymer banknote on September 29, 2010; and the N100 Commemorative banknote on December 19, 2014.”

Emefiele hinted that the new and existing notes would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender.

Consequently, the CBN governor said all banks currently holding the existing denominations of the currency might begin returning the notes to the CBN immediately, stressing that the newly designed currency would be released to the banks on a first come, first served basis.

Emefiele also urged bank customers to begin paying into their bank accounts the existing currency notes to enable them to withdraw the new banknotes once circulation begins mid-December 2022.

 He mantained that all banks were expected to keep open their currency processing centres from Monday to Saturday so as to accommodate all cash that would be returned by their customers.

Emefiele pointed out that the present notes remained legal tender and should not be rejected as a means of exchange for the purchase of goods and services.

 He reassured the public that the CBN would continue to monitor both the financial system, in particular, and the economy, in general, and always act in good faith for the achievement of the bank’s objectives and the betterment of the country.

He disclosed that currency management remained a key function of the CBN, as enshrined in Section 2 (b) of the CBN Act 2007. The CBN governor announced that for the purpose of the transition from existing to new notes, bank charges for cash deposits had been suspended with immediate effect.

He warned that no bank customer should bear any charges for cash returned/paid into their accounts.

Commenting on the concerns for people in rural areas following the currency redesign, Emefiele said, “It would impact on the people in the rural areas, particularly those who do not have bank accounts and that is the reason I said in a session on Tuesday on the anniversary of our eNaira, that we would be introducing a number of tokens where people in the rural areas who don’t have a bank account should be able to conduct banking services without having a bank account.

“However, if you are carrying cash, you can go to the nearest bank branch near you, they will take your cash and open an account for you for the purpose of returning the old naira into the banks’ vaults and then collecting the new naira.”

Emefiele lamented that in recent times, currency management had faced several daunting challenges that had continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.

He highlighted that recent developments in photographic technology and advancements in printing devices had also made counterfeiting relatively easier, adding that in recent years, the CBN has recorded significantly higher rates of counterfeiting, especially at the denominations of N500 and N1, 000 banknotes.

Pundits have argued that campaign financing, money laundering, terror financing and payment of huge sums of monies to kidnappers as ransom are going to be adversely affected by the change.

In the same vein, they said that those who have starched huge cash ahead of the 2023 elections for vote-buying and prosecution of their campaigns would be forced to bring those cash out and many of them would be forced to explain how they came about the monies to security operatives.

In a related development, the Executive Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa, has commended the move by the CBN, stressing that it is “a well-considered and timely response” to the challenge of currency management, which had negatively impacted the country’s monetary policy and security imperatives.

The EFCC has already signalled its intention to move against currency hoarders who may be forced to bring out their huge stash of cash into the banks.

The EFCC chairman, Bawa has called on operators in the Nigerian financial services sector, especially deposit money banks and bureau de change operators, to work within the guidelines provided by the CBN to ensure seamless withdrawal of the old currency.

He warned that EFCC would monitor the process to ensure that unscrupulous players and currency speculators and their cohorts among the BDCs do not undermine the exercise.

The EFCC boss also charged banks to be alive to their reporting obligations and not assist unscrupulous customers in laundering suspected proceeds of crimes through their system.

He argued that the objectives, which the CBN sought to achieve with the redesign and reissue of the higher denomination Naira notes, were in tandem with the objectives of the Money Laundering Prevention Prohibition Act 2022, which criminalises the conduct of cash transactions above a certain threshold.

According to Section 2 (1) of the Money Laundering Act 2022, “No person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding— (a) N5, 000,000 or its equivalent, in the case of an individual; or (b) N10, 000,000 or its equivalent, in the case of a body corporate.”

The EFCC chairman recalled that the commission had recently taken operational action against currency hoarders in major commercial cities of Nigeria, adding that he was optimistic that the new currency measure would further boost Nigerians’ embrace of banking culture and encourage the acceptance of cashless transactions.

Bawa said, “It is, therefore, pertinent to issue this stern warning to bureau de change operators to be wary of currency hoarders who would attempt to seize this opportunity to offload the currencies they had illegally stashed away.”

The EFCC boss revealed that currency hoarders readily made their hoard available to criminal enterprise, adding that the commission will spare no effort to bring to book any financial services operator which ran afoul of extant laws and regulations.