Central Bank of Nigeria (CBN) Extends Deadline for Old Naira Note Swap
The Central Bank of Nigeria (CBN) has extended the deadline for the swap of old Naira notes by 10 days, according to a press statement issued on Sunday. CBN Governor, Godwin Emefiele, announced the new deadline of February 10, 2023.
Old notes can still be deposited directly with the CBN until February 17, 2023, as a result of widespread complaints from Nigerians about their inability to swap the old notes for the new designs ahead of the previous January 31 deadline.
Banks have been working over the weekend to swap the notes, but there have been widespread complaints of scarcity, particularly affecting rural areas.
New Deadlines Explained
The CBN has set two deadlines: February 10 and February 17. The first deadline, February 10, is a 10-day extension from January 31, which will allow for the collection of more old notes held by Nigerians and improve the swap success rate in rural communities.
After this date, old notes outside of the CBN will lose their legal tender status and cannot be spent. The CBN will be mobilizing their staff and working with the EFCC and ICPC to achieve their objectives.
The second deadline, February 17, is a 7-day grace period, in compliance with sections 20(3) and 22 of the CBN Act, allowing Nigerians to deposit their old notes at the CBN after the February 10 deadline when the old currency will have lost its legal tender status.
Why CBN Rolled Out New Naira Notes
Emefiele explained that the CBN was facing problems with the management of the current series of banknotes in circulation, especially those outside the banking system in Nigeria.
He added that currency management is a key function of the bank, as outlined in Section 2(b) of the CBN Act 2007, but this function is facing increasing challenges.
One of these challenges is the hoarding of banknotes by members of the public, with statistics showing that over 80% of currency in circulation is outside the vaults of commercial banks. Another challenge is the circulation of dirty and unfit banknotes, which gives the CBN a bad image and increases the risk of financial instability.
Emefiele also highlighted that the currency in circulation increases the risk of fake notes, with the CBN reporting significantly higher rates of counterfeiting, especially in the higher denominations of N500 and N1,000 banknotes.
He added that, according to global best practice, central banks should redesign, produce, and circulate new currency every 5-8 years, but the CBN has not redesigned the Naira for the past 20 years.
According to the CBN’s latest press release, since the distribution of the new Naira design began, the exercise has achieved a success rate of over 75% of the N2.7 trillion held outside the banking system. The CBN reported that Nigerians in rural areas, villages, the elderly, and vulnerable groups have had the opportunity to swap their old notes.
President Buhari Supports
CBN President Muhammadu Buhari stated that the target of the CBN’s policy on the redesigned Naira notes was not aimed at the general public but at those using money for illicit purposes. He explained that the policy was necessary to prevent fake money, corruption, and terrorist funding.
The President spoke out in response to reports of long queues as people wait for hours to deposit old notes and receive new ones, which have triggered public anger and criticism from opposition.
President Buhari stated that the currency changes were aimed at people storing illicit funds
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