The Central Bank of Nigeria (CBN) has marshalled out a plan to flood the system with N200 notes.
Aside from meeting with bank chief executives to release the old and new N200 notes in their vaults, the CBN will, on its part, push out the old N200 notes that were initially deposited as banknotes to be phased out.
A very senior member of the bank told The Nation that “by today, there should be enough of the old N200 notes combined with the new ones to flood the banking system with enough cash to meet the genuine cash needs of normal people and small enterprises”.
The official noted: “More cash will get into circulation to stimulate demand for goods and services which had experienced a lull because of shortage of cash.”
When asked how much of the N200 denomination has so far been printed by the CBN to meet this demand, the CBN official said he does “not have information on the quantum of new N200 notes printed. One thing I am sure of is that the CBN will put into circulation the quantum of new naira notes it judges to be optimal”.
Last week, CBN Governor Godwin Emefiele had suggested that about N700 billion is the optimal quantity of cash the economy requires.
According to the official, “with the old N200 notes being put back into circulation plus the new notes, Nigerians will experience substantial relief in the next few days, especially if the commercial banks do not sabotage the directives”.
He then quickly chipped in that “there’s no relief for hoarders of N500 and N1,000 notes as these have ceased to be legal tender”.
An underlying reason for the demonetization agenda of the CBN is the desire to quickly move Nigeria from a predominantly cash based society to a cashless society.
However, following the lack of interest shown by Nigerians to adopt the eNaira digital currency of the Central Bank, the apex bank has mandated all staff of the bank to open an eNaira wallet.
The Nation gathered from a staff of the CBN that the allowances of staff will be paid into the wallet to fund their eNaira account, while basic salaries will go into their regular accounts.
Since October 2021 when the eNaira was launched, less than 99.5 percent of Nigerians have refused to use the CBN’s digital currency, the eNaira, preferring instead to use cash that they are used to.
The CBN staff who spoke to The Nation said the Central Bank in mandating its staff to operate the eNaira account was copying commercial banks when they introduce new products.
According to the staff, “when a new product is introduced in the bank, the bank’s staff are asked to use the product so that they can be able to sell the product properly”.
The central bank in October, 2022 decided to replace all high-denomination cash bills in the economy with the aim of shifting Nigerians to use less cash.
However, the apex bank had in October hinted that it will significantly reduce the quantity of higher denomination notes (N500 and N1,000) it will print going forward.
The CBN official who spoke to The Nation revealed that the CBN is in a race with other central banks around the world to institutionalise Central Bank Digital Currency (CBDC).
According to the official, “114 countries, representing over 95 percent of global GDP, are exploring a CBDC while the Bank of England is tinkering with the idea of the digital pound.