Central Bank of Nigeria (CBN) proposes to redesign several naira notes, but Nigerian Minister of Fnance, Budget and National Planning Zainab Ahmed has objected.
She claimed that the ministry was caught off-guard by the news of the intentions.
On Friday, during a budget defense session before the Senate Committee on Finance, she made this statement.
After CBN Governor Godwin Emefiele announced the proposal to redesign the 100, 200, 500, and 1,000 notes, she weighed in just 48 hours later to say that the new bills will be sent into circulation in December.
The new N100, N200, N500, and N1000 notes are scheduled to enter circulation in December, with the previous notes being retired from circulation by January 31, 2023. He explained that the decision was made so that the government could better regulate inflation and combat counterfeiting.
Mr. Emefiele had previously stated that the CBN and the country's credibility have been jeopardized by the growing complexity and magnitude of the threats to currency management.
The CBN governor went on to say that the new banknotes at the N200, N500, and N1,000 denominations would be redesigned, printed, and circulated with the blessing of President Muhammadu Buhari in accordance with Sections 19 (a) and (b)of the CBN Act 2007.
Mrs. Ahmed, responding to a query from Opeyemi Bamidele (APC, Ekiti) on projected plans, warned that the redesigned Nigerian naira banknotes might have unintended repercussions.
Due to a rush in trade of stacked naira notes for other currencies, especially the dollar, Mr. Bamidele said that the exchange rate of the Naira had increased from N740 to N788 in the two days following the announcement.
"The strategy may be a well planned one, but the timing going, by facts on the ground, it's absolutely wrong as the naira may collapse to as low as N1,000 to a US dollar by January 31, 2023 slated for full implementation of the policy," he added.
The minister of finance said that she and her staff had been unaware of the policy and had learned about it through the news.
"We were not consulted at the Ministry of Finance by the CBN on the planned revamping of the naira and cannot comment on it as regards merits or otherwise," she added.
Mrs. Ahmed urged the panel to call in the CBN governor to answer questions about the merits of the proposed policy and the appropriateness of implementing it at this time. The Central Bank of Nigeria (CBN(Bank) )'s proposal to replace higher naira notes has been met with criticism over the length of time the bank says it will enable consumers to exchange old notes. But analysts have been more vocal about the policy's effects on the naira, which are expected to worsen as those in possession of illegal funds hurry to convert their holdings into dollars as the exchange rate rises.
Also Read: As the Central Bank of Nigeria works to replace naira banknotes, the value of the naira continues to set new lows.
Kingsley Moghalu, a former CBN deputy governor, has argued that the time frame given by the bank is too short and "may impose significant operational pressure on banks and some traders may prematurely reject the present currency notes once the new ones come into circulation."
But he argued that this was an essential measure for reducing the money supply and fighting inflation.
Bloomberg reports that the International Monetary Fund has cautioned Nigeria to avoid actions that could damage investor trust in the country's banking system. According to the IMF's resident representative Ari Aisen, the Fund has contacted the CBN to learn more about the plan that was unveiled on Wednesday.
The official was quoted by Bloomberg as adding, "We stand ready to provide any support as needed."