Naira Reissue: Bank Deposits Rise Significantly

Naira deposits in commercial banks have increased since the Central Bank of Nigeria (CBN) announced the country’s currency reissue plans.

Based on the announcement, there has been significant increase in deposits, according to CBN’s Director of Corporate Communications, Ostia Nwanisobi.

He, however, failed to provide details regarding the percentage of increase, but only hinted that the apex bank had noticed a surge in amount of deposits.  

Prime Business Africa had reported that the N200, N500, and N1,000 notes will be redesigned and released on December 15, 2022. The move is to mop up the naira in circulation and also curb hoarding of the currency.

The central bank noted that only N600 billion of the N3.3 trillion currency in circulation was in the vault of commercial banks.  N2.7 trillion remains outside the financial system. 

“The CBN is pleased to note the positive response of the banking public to the policy through increased currency deposits across banks and other financial institutions,” Nwanisobi said in a statement.

“CBN remains committed to the seamless implementation of the initiative to ensure the achievement of its objectives to preserve the integrity of the local legal tender by reducing the significant amount of cash outside the banking system and its use in criminal activities, curtail counterfeiting, and promote financial inclusion, among others.”  

Recall that the decision by the central bank was criticised by Finance Minister, Zainab Ahmed, who said that redesigning the naira would lead to rise in dollar rate, as the local currency would drop in value. 

Ahmed told Senators that her Ministry was not  “consulted” by the CBN regarding the planned Naira redesigning and that she could not comment on the merits or otherwise.

“However as a Nigerian privileged to be at the top of Nigeria’s fiscal management, the policy as rolled out at this time portends serious consequences on the value of the Naira to other foreign currencies. 

“I will however appeal to this committee to invite the CBN governor for required explanations on the merits of the planned policy and rightness or otherwise of its implementation now.” 

The governor of the central bank, Godwin Emefiele, however, said the CBN received approval from President Muhammadu Buhari, following which the Presidency confirmed its support for the apex bank’s decision on naira reissue.