The Central Bank of Nigeria (CBN) recently said it has got the approval of President Muhammadu Buhari to redesign and produce new N200, N500, and N1,000 notes.

As enshrined in section two (b) of the CBN Act 2007, currency management is a key function of the apex bank. Hence, the apex bank says it wants to manage money supply better.

What to note

Currency redesign is something other central banks do every five or eight years, but the last time Nigeria printed new currency notes was 20 years ago.

Currency management in the country has faced several escalating challenges which threatened the integrity of the naira, the CBN, and the country in general.

The bank said it is doing the naira redesign in order to have control of the currency in circulation, manage inflation, as well as tackle counterfeiting.

Out of about N3.7 trillion in circulation, more than N2 trillion is outside the banking system, hence the CBN wants to call in all of the N3.7 trillion, and then send it back into the system.

According to the CBN, currency in circulation (CIC) can be defined as ‘currency outside the vaults of central bank. That is, all legal tender currency in the hands of the general public and in the vaults of the deposit money banks.

The CBN employs what is referred to as the ‘accounting/statistical/withdrawals and deposits approach’ to compute the CIC in Nigeria.

What is the process involved?

Currency production is not an easy or simple task, but one that involves highly trained and skilled craftspeople, specialised equipment, and cutting-edge technology.

The Currency Operations Department of the CBN is responsible for the printing of new naira notes.

Naira notes and coins are printed/minted by the Nigeria Security Printing and Minting (NSPM) and sometimes, other overseas companies, and issued by the CBN.

The CBN maintains an office called the Mint Inspectorate in the Abuja and Lagos premises of the NSPM for quality control and receipt of finished naira banknotes and coins.

Currency is issued to Deposit Money Banks (DMBs) through the branches of the CBN and unfit notes are retrieved through the same channel.

Who does it affect?

The cash component of money in circulation affects everyone.

No matter the small amount that you have at home, even if it is a few thousands, once it is in the N200, N500 or N1,000 denominations, you have to take it into the bank.

What should members of the public do?

The CBN said members of the public are to note that the present notes remain legal tender and should not be rejected as a means of exchange for the purchase of goods and services.

Customers of banks are encouraged to start paying the existing currency into their bank accounts to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.

The apex bank also said bank charges for cash deposits have been suspended with immediate effect, to hasten the transition from existing notes to new notes.

Bank customers shall not bear any charges for cash returned/paid into their accounts.

Photo: CBN