CBN Governor Addresses Low-Denomination Naira Notes Shortage
Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has attributed the current shortage of low-denomination naira notes to decreased public demand, rather than the apex bank’s withdrawal of notes and coins from circulation. Cardoso shared these insights during a press conference following the 306th Monetary Policy Committee (MPC) meeting held in Abuja.
Transition to Digital Payments Highlighted
During the briefing, Cardoso highlighted that this reduction in demand signifies Nigeria’s gradual shift towards digital payment methods and broader financial inclusion. On July 8, the CBN reaffirmed that the 100 naira note remains legal tender, urging Nigerians not to reject it in transactions.
Legal Tender Status of Low-Denomination Notes Confirmed
Cardoso emphasized that the circulation of lower denomination notes will largely depend on public demand within the payments landscape. Addressing concerns about the availability of these notes, he reaffirmed their status as legal tender unless stated otherwise by the central bank.
Supply and Demand Affecting Currency Circulation
The CBN governor expressed concerns over the potential shortage of lower denomination banknotes and coins, citing the evolving dynamics of supply and demand as more Nigerians gravitate towards electronic payment options. He pointed out that the financial landscape is increasingly adapting to digital transactions, which diminishes reliance on cash, especially for smaller denominations.
Financial System Moving Towards Digital Transactions
According to Cardoso, the observed decline in circulating small currencies correlates with the overall shift towards financial inclusion and digitization within the economy. He stated, “The question of why there aren’t as many currencies in circulation is fundamentally one of supply and demand. If there is less need for coins or small denominations, fewer of them will be in circulation.”
Ambitious Goals for Financial Inclusion
The governor also mentioned the CBN’s newly unveiled Payment System Vision (PSV2028), which aims to enhance financial inclusion over the next two years. He anticipates that as adoption of digital payment methods continues to rise, the demand for lower denomination notes will reduce correspondingly.
Global Trends Favoring Digital Payments
Cardoso acknowledged that while the depreciation of the naira impacts the purchasing power of low-denomination banknotes, the global trend is undeniably leaning towards digital payments over cash transactions. He referred to practices in developed nations, where cash is increasingly becoming obsolete to highlight the inevitable shift Nigeria is facing. However, he acknowledged that such change in Nigeria will not occur instantaneously.
Embracing the Shift Towards Digitalization
Notably, Cardoso pointed out, “The world is moving in a certain direction, and we will not be left behind.” He referenced how digital transactions are becoming commonplace for Nigerians traveling abroad, who can utilize Naira cards for payments. He concluded by emphasizing that the convergence towards digital solutions is an ongoing trend that Nigeria will continue to embrace.
