The CBN redesign Attempts: Tilting Towards The Wrong Monetary Policies
There Central Bank of Nigeria has reenacted a currency redesign policy for a long while now and Nigerians already know what the new currency looks like, but the problem here is that these new currencies are still now even 20% into circulation and there's a deadline for January 31st for the old currencies to stop being considered a legal tender, this isn't even the problem alone. Some monetary policies came in with these redesign policies and it's massively going to create scarcity and a huge demand for the Nigerian naira.
We know that in recent years, the Nigerian currency has been bastardized, it has constantly lost value due to the lack of adequate monetary policies to check it from falling against the dollar and the CBN deems that the best way to do this is to actually reduce the money in circulation by placing a threshold on withdrawals through POS and ATM. However, I feel that spending billions of naira to redesign a new note and create demand for the Nigeria naira, isn't going to give any value to the naira, it's just like robbing Peter to pay Paul. Firstly, redesigning a new note costs a lot of money.
The personnel in charge of redesigning these notes, will mismanage government funds and one of the reasons why they'll do so is because there's the mentality that government resources can be wasted, the people working government jobs feel that since the money isn't theirs, they can waste these resources, forgetting that some of the money that's being used by the Nigerian government to run the state are federal loans that are being collected from China. The country is generating enough money to run the government, but because we do not have professionals in the right financial sectors, most financial policies and government-funded projects are aimed towards embezzlement, creating ghost projects with real-time funds from the government's pockets.
Now, I wouldn't really say that the central bank governor is wrong, I just feel that he's acting according to his capacity. Firstly, changing notes isn't bad, I think that creating a deadline for the old notes to stop being used and not putting the new notes in circulation is a bit diabolical. Now the deadline for the old notes to cease being legal tender is in five days and the commercial banks are currently hoarding the new notes, holding them in other to create an artificial demand for the Naira. What this has done is that it has created a lot of Chaos lately. Some businesses require business owners to keep cash, and because of the new redesign policies, these people are now left trying to beat the deadline.
Commercial banks are still giving old notes to people who are depositing the old notes. The Nigerian banks are back to having crowds like in the COVID era. I believe that creating a deadline is crazy, they could have easily fazed out all the old notes since people are constantly withdrawing and depositing money on a daily. However, the central bank governor wants to create a huge demand for the new notes that's why he placed a deadline on the old notes, now, he knows that the rush will be there for people to deposit the old notes through the commercial banks.
The goal is to limit the Nigerian naira in circulation, maybe even encourage people to hold naira instead of dollars, while this is currently not bad, these policies would not by any means help the Naira that's currently plummeting in value against the dollar. Nigeria does not have a functional regulatory system. The central bank governor thinks it's about the currency itself, but this isn't true. The market system in Nigeria creates artificial inflation through the scarcity of goods and services.
There are people who are there to bend the system for the purpose of profiteering. Because there are no laws to keep these people in check, it'll be really difficult to control prices or regulate the bodies who are in charge. This is to say that the monetary policies should target the problems of the unregulated market at the grassroots while working to curb the power of those in government when it comes to bodies like the central bank of Nigeria. However, politicians in Nigeria are above the law, whatever policies they make do not affect them, and this one one of the reasons why they do not get adequate feedback as to whether the laws they make are functional or even good enough.
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I don't understand how demand for Naira is created just by redesigning, value isn't going to come from how fancy the currency looks or its domination.
I might not be the most clued up when it comes to the monetary system but creating a new note is just a waste of resources. There are other areas to focus on to give some strength to the Naira, through international business with other nations, maybe putting out the option to get paid in Naira, etc.
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They feel that designing a new note will take the old notes put it circulation. Then for the new notes they want to reduce withdrawal per day via POS and ATM point, thereby making the currency scarce. They feel scarcity is what will bring the value.
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Honestly this isn't going well with me. Redesigning note with out value? They really needs to be asked what they are upto.
My problem is how banks still issues out old note when a deadline is already there..
So how will it work??😲
Well we'll just keep watching!
It's the way the CBN has functioned lately. Like I said, the aim is to create value for the naira, but they're already getting it wrong as stronger regulations and better Monetary Policies are what the country needs.
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It's alright...
We'll just keep waiting to see how things turns out!
Here in my country instead of Redesign they introduce New Note... Recently 75rs Note was officially announced on independence day with new design.
We already have 10rs, 20rs, 50rs, 100rs, 500rs, 1000rs and 5000rs in circulation each have different design and it's keep on coming which is kind of why it is depreciating... running on Loan funds.
Hope so, Nigerian Politicians will think Good for country and people making these decisions and hopefully it will bring Good impact and change.
When I say redesigning, it is also an aspect of introducing new notes into the system that has an element of resemblance to the old notes as well.
I'm still surprised as to why they would spend a significant sum of money redesigning the new naira notes; does this change its value relative to the dollar? And given the low circulation rate of the old notes, why set a deadline for them?
Sometimes I wonder if the governor of the CBN or whoever is in charge truly thought this notion through. Nigeria is heavily in debt, yet you continue to waste the funds on things that don't even make sense. Even if it does, there is still insufficient management and planning.
All they do is borrow money, but they are incapable of investing it wisely to generate profits.
Well, what can I say?
That's the kind of country we fine ourself in
The money budgeted for the designing these notes are the targets for the people who are in charge. I can mainly say the reason why we have so much billions going into the designing is because of the aspect of embezzlement. Government personnel wants embezzle at their own affordable point, if not, redesigning is not a monetary policy that would help appreciate the naira. It's a crazy country we live in.
It's really crazy how they are after how to get their pockets filled rather than trying to help the economy of the country. It's just like when a person takes loan from the bank just to go for clubbing.
I don’t really know why they felt the new design would somehow bring in more value for the Naira note. I do hope they extend the deadline they made.
They might not extend it officially, but I think people will still be able to spend the old one till the new one completely goes out of circulation
I hope so.
Wow,I find this interesting but truth he told the deadline is really short,I think it was last week that some nysc was passing through the market and telling people to go out and deposit their old naira notes but they got their response from the people,they said when we go to the ATM,they give us old naira notes again instead of new notes and yet the CBN is giving deadline. It's not done like that,it's a poor policy
They actually do not wants to start giving out the new notes I think they are currently hoarding it. The Central Bank governor is trying to play a type of game that we do not know anything about yet. But what I know is that eventually it is people who are poor that will suffer and the government officials and wealthy people will never be affected
I think it's dumb to make all of the old note not legal-tender as soon as the new system comes out. It's going to be mass chaos and I don't think redesigning will help much at all. I also don't trust the government and how they spend either. It's just a way to siphon money from the normal citizen to the rich/powerful.
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You are right, it is a way to siphon money from the poor people to the wealthy people. As you have said there is already chaos in the system, girls is happening in the central and commercial Bank as we speak and we do not really know what games the people at the top are playing.
So they are really spending huge money on this redesigning? Lolz... Nigeria my country
I was in the bank this afternoon to get the new Note but they said it isn't available 😃
Imagine, whereas some Market men and women are there frustrating my life by rejecting my old notes
Which way naija
I also heard this evening that CBN had extended the deadline to 31st July 2023
I am yet to find out though
It really crazy how all of this is really going