Central Bank of Nigeria Governor Godwin Emefiele said the new naira notes are expected to improve the effectiveness of the organization’s monetary policy and bolster the cause of financial inclusion.
Force currency hoarders back into the banking system
According to the governor of the Nigerian central bank, Godwin Emefielerecently launched naira banknotes are expected to force forex traders to return “hoarded currency [back] in the banking system. In a speech During the unveiling ceremony of the new naira banknotes, Emefiele claimed that the new banknotes could potentially improve the effectiveness of the country’s monetary policy.
Apart from helping to put the old banknotes back into circulation, the CBN Governor insisted that the redesigned naira banknotes are likely to further the bank’s financial inclusion cause. Emefiele explained:
We believe this exercise would help increase financial inclusion, move towards a cashless economy and ensure greater formalization of the Nigerian economy.
According to Emefiele, once the exercise of disposing of old 100, 200, 500 and 1,000 naira banknotes is completed, the job of tracking and identifying suspicious cash movements by the CBN will become easier. At the moment, this has not been possible as 84.71% of naira banknotes “in circulation are outside the vaults of commercial banks”.
CBN’s controversial naira overhaul plan
Meanwhile, in the same speech, Emefiele repeated CBN’s earlier claims that implied the controversial decision to relaunch the tickets had been endorsed by Nigerian President Muhammadu Buhari.
According to the CBN, the phasing out of current banknotes is not only long overdue, but is “a global best practice for central banks” that must be repeated every 5-8 years. However, after the CBN announced its intention to replace the old naira notes with redesigned notes, the currency’s parallel market exchange rate against the US dollar quickly depreciated.
As reported per Bitcoin.com News, the fall in the naira was caused by the sharp increase in demand for US dollars compared to the decrease in supply. However, after the Nigerian Economic and Financial Crimes Commission began cracking down on so-called illegal currency dealers, the parallel exchange rate of the local currency improved from just over 900 units per dollar in October to just under 800 units per dollar on November 26.
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