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CBN: Effects of the New Naira Note on Your Money
CBN’s Godwin Emefiele revealed plans to redesign the N200, N500, and… notes, and here are the Effects of the New Naira Note on Your Money
- Effects of the New Naira Note on Your Money
- The CBN governor, Godwin Emefiele
- Impact on your Money
Effects of the New Naira Note on Your Money: Nigerians were caught off guard when CBN’s Godwin Emefiele revealed plans to redesign the N200, N500, and N1,000 notes by December 15—just 50 days from today.
In order to increase the effectiveness of monetary policy in containing inflation, the proposed policy change is presented as a way to bring money from outside the banking system into it. Significant banknote hoarding, a lack of crisp, suitable notes, and the growing ease of banknote forgery were a few of the main causes mentioned.
The CBN governor claimed that the measure was done to seize control over the cash that was in use. Additionally, they have secured President Muhammadu Buhari’s consent to issue fresh notes in place of the ones currently in use.
The CBN governor, Godwin Emefiele
Godwin Emefiele, the CBN governor, reportedly stated: “Statistics show that 85% of the currency in circulation are outside the vaults of our commercial banks. Data indicates that N2.73 trillion out of the N3.23 trillion currency in circulation was outside the vaults of commercial banks across the country.
“In recent years, the CBN has recorded significantly higher rates of counterfeiting, especially the high denominations of N500 and N1000 bank notes.”
Emefiele added that it would be more challenging to pay ransom to terrorists and kidnappers due to the redesign of the naira.
READ MORE: CBN To Redesign N200, N500, And N1,000 Notes
Additionally, there is a deposit fee for Nigerians who want to deposit more than N150, 000 in cash. Therefore, this is a practical approach for the government to generate quick revenue.
The governor of the apex bank asked Nigerians to visit their banks and deposit their Naira notes, saying that transactions worth less than N150,000 would not be subject to a deposit fee.
Emefiele also mentioned how the currency change is long overdue. He asserted that the naira, the current series of banknotes, has not undergone any redesign in the last 20 years. The bank made a properly calculated decision to fulfill the mandate of its authority as stated in Section 2B of the CBN Act of 2007 to guarantee a reliable and robust legal tender.
“It is therefore no longer tenable to continue with business as usual especially given the continually evolving circumstances that could impede the optimal performance of our naira.”
“Furthermore, we believe that the re-design of the currency will help deepen our drive to entrench a cashless economy, and a christ minting of our E-Naira will complement it.”
Effects of the New Naira Note on Your Money
RNN thinks that Nigerians’ finances will be affected in a number of ways by the central bank’s most recent decision to redesign the naira note.
Money from corruption
People who keep illegal cash hidden away in their homes or other secure places will be compelled to bring it out or risk losing it to counterfeit. These people run the risk of having their big deposits discovered by the central bank and the money laundering statute gives the EFCC the authority to request information on deposits over N500,000.
Effects on the economy
At RNN, we certainly believe that the introduction of new naira notes in 2023 will have a favorable economic impact. We think the CBN governor’s announcement to redesign the larger naira denominations of N200, N500, and N1000 by 2023 will benefit the economy because it will help to slow or stop the economy’s spiraling inflation, which is caused by too many naira notes in circulation mostly outside the vaults of the majority of commercial banks in the country.
Additionally, we think it provides the existing central bank with a chance to include cutting-edge technology in the layout of the new naira notes. The adoption of the eNaira, which offers the central bank better control over the tracking and management of the country’s currency, could also be favorably impacted by the new naira notes.
READ MORE: CBN orders Nigerians to return old naira notes, gives ultimatum
Implication on Assets
The impact of the 2023 elections and corrupt money is that some people would look for alternate methods of depositing the money out of panic. One method is to use legal means to wash part of the money that was gained unlawfully.
Also, some people would be obliged to utilize their funds to buy things like properties they can later sell for cash that is now readily available for bank deposits. The real estate industry as well as profitable establishments like eateries, bars, clubs, dry cleaners, supermarkets, etc. would probably be impacted by this.
Exchange rate
We believe that some people would be forced to exchange their naira for dollars as a result of the action taken to swiftly meet the central bank’s deadlines.
Particularly those who are desperate to turn illegal funds into legitimate currency and those who require the money for the forthcoming elections.
We believe that one simple way they’ll accomplish this is to convert the funds into dollars at any favored rate. The hasty conversion of the currency into dollars will probably affect the exchange rate, further devaluing the naira to the dollar at the parallel market.
2023 Elections
Politicians who have amassed large sums of cash in preparation for the 2023 election will be compelled to deposit their monies by January 31st, 2023, or risk having their funds rendered worthless. Some individuals who are unable to establish the source of the funds may be questioned by the EFCC of Nigeria.
As a result, it will be much more challenging to start vote buying in 2023 because politicians will likely have to distribute cash before the end of January or postpone electronic money transfers until then.
We anticipate the central bank will include characteristics in the newly produced notes that allow it to track the flow of money, even if they are still legal tender and can be distributed.
Thank you for reading; I hope you learned something.
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Cashless Policy: CBN Switches to National Domestic Card, stop Issuing of ATM Card