In an attempt to reduce the volume of cash baggage and security exposure in cash transactions, the Central Bank of Nigeria may be contemplating the introduction of new currency denominations of N2,000 and N5,000. Also plans to convert N5, N10, N20 and N50 into coins which are all presently notes.
Spokesman of the Central Bank Ugochukwu Okorafor made no outright denial that such a policy was being contemplated, said instead that he had to get further clarification from the bank’s leadership.
A financial expert and executive chairman of the Society for Analytical Economics, Nigeria, Dr. Godwin Owoh, has said that if the policy is carried out, it would not only lead to inflation but would increase the ability to carry out cash transactions.
He said the activities of the CBN were becoming more commercial in nature, suggesting that this was more of a fiscal policy than a monetary one and that it should be decided by either the minster of finance or the president.
Owoh said, “There has been no official pronouncement from the CBN on this policy but, if it is carried out, it will only give the bank’s management the capacity to award more contracts, making it a purely selfish and commercial endeavor. The CBN has been carrying out commercial activities, which are normal banking operations – they set rules on how to withdraw or not withdraw money.”
He said, “ The CBN has invested a lot into the cashless policy and point of sale terminals will suffer; 100,000 units of hardware for e- transactions have been installed in different places.
“The process of printing money is clearly a fiscal issue. Embarking on this policy would indicate a lack of harmony between the fiscal and monetary policies.”