The Central Bank of Nigeria (CBN) has slashed currency in circulation from N3.29 trillion as of October 2022 to N1.38 trillion by January 2023.
This is the apex bank embarks on the demonetisation policy with the naira redesign policy.
According to data obtained from the CBN showed this represents a drop of N1.91tn in the three-month period.
The Governor, CBN, Godwin Emefiele, had in October 2022, announced plans to redesign the old N200, N500 and N1,000 notes.
Emefiele also announced deadlines for Nigerians to swap their old with the new notes.
“Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks in the order of first-come-first-serve basis,” the apex bank said.
“Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins.”
He decried the challenges associated with currency management including significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of currency-in-circulation was outside the vaults of commercial banks.
Other challenges, he added included shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting evidenced by several security reports.
In recent years, he said, the CBN had recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.
Although the global best practice was for central banks to redesign, produce and circulate new local legal tender every five to eight years, he said, the naira had not been redesigned in the last 20 years.
“On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections A and B of the CBN Act 2007, the management of the CBN sought and obtained the approval of the President to redesign, produce, and circulate new series of banknotes at N100, N200, N500, and N1,000 levels,” Emefiele said.