By Chris Eze
The Central Bank of Nigeria (CBN) has broken the ice on the series of speculations going round on their preparation to churn out 5000 notes.The Central Bank of Nigeria says it has no plan to introduce N5,000 denominated banknote as being speculated by some sections of the society.
Ahmed Umar, the Director, Currency Operations of CBN clarified this at a three-day workshop organised by the Nigeria Deposit Insurance Corporation (NDIC), for members of the Financial Correspondents Association of Nigeria (FICAN) and Business Editors.
Umar who spoke on the topic, “Redesign of the Naira: Benefits to the financial system and the Nigerian economy”, said the apex bank was not carrying out note restructuring.
“We are not introducing any new note because there was noise, some people have seen one N5000 note that we don’t know about,” he said.
I was wandering what effect this could have on Nigerian economy if introduced? Anyway, the introduction of N5000 note will eventually alter the pricing structure of products in the market leading ultimately to the permanent disappearance of the 5, 10, 20 & 50 naira notes (and even the proposed new coins) from circulation. The extinction of these smaller denominations will negatively impact the buying capacity and habits of low-income earners and the poor as goods and services will be priced above their levels. Sustained increases in prices may the unintended consequence.
Instead of thinking in this direction, CBN should rather work towards strengthening the purchasing power of the naira through policy consistency. The steady slide in the value of the naira in relation to other currencies like the USA dollar, British pound sterling, etc, as an import-dependent country should be a major source for concern.
