Although the implementation of the Central Bank of Nigeria’s (CBN) naira redesign programme is widely blamed for the cash shortage that Nigerians have been experiencing in the last few months, the policy has, on the whole, boosted banking system liquidity, a report by Coronation Merchant Bank research department has said....CONTINUE READING
Governor of the CBN, Mr. Godwin Emefiele, had announced on October 26 that the apex bank had obtained President Muhammadu Buhari’s approval to change the design of the old N200, N500 and N1,000 denominations…..CONTINUE READING
The CBN Governor, who said that bank customers were expected to deposit their old notes in their bank accounts and that the new currency notes would become legal tender as from December 15, 2022, explained that the move was aimed at addressing the increasing ease and risk of currency counterfeiting as well as the worsening shortage of clean and fit currency, with the attendant negative perception of the central bank.
However, the implementation of the naira redesign policy has been criticized in some quarters as it has led to bank customers who deposited their old N200, N500 and N1,000 banknotes in their accounts, being unable to access cash.
Commenting on the situation in its report, Coronation Merchant Bank stated: “What is the effect of the replacement of bank notes? Given the withdrawal of a significant sum of old naira bank notes, which we estimate as a reduction of N2.3 trillion ($5.0bn) over four months, we would expect customers’ accounts with banks – both current accounts and deposit accounts – to swell. “And this being the case, we would expect banks to become more liquid than they were a few months ago.
This has happened, with the weight of money driving down 1-year Treasury bill rates. Inter-bank rates have also declined gently.” Furthermore, the company said: “As we described a few weeks ago, some of this liquidity has been absorbed by a high level of issuance of Federal Government of Nigeria (FGN) bonds, so the government is benefitting by selling more bonds early in the year than it had planned. At the same time, the Central Bank of Nigeria has not seen fit to mop up liquidity through its Cash Reserve Requirement (CRR).”
