Central Bank of Nigeria Affirms Legal Tender Status of All Banknotes Amidst Transition to Redesigned Currency

The Central Bank of Nigeria (CBN) has issued a statement reiterating that all banknotes, both old and redesigned, remain legal tender and should be accepted without rejection. This announcement comes as the CBN directs its branches across the country to continue issuing different denominations of banknotes, addressing recent concerns of cash scarcity in major cities. The move aims to provide clarity and assurance regarding the legality of old Naira banknotes as the December 2023 deadline for the transition to redesigned currency approaches.

Key Points:

1. Legal Tender Status Reaffirmed:
   • The CBN emphasizes that every banknote issued by them, including both old and redesigned versions, retains its legal tender status and must not be refused, in accordance with Section 20(5) of the CBN Act, 2007.
2. Adequate Supply of Banknotes:
   • The CBN assures that there is a sufficient stock of currency notes available across the country to support normal economic activities. It directs its branches to continue issuing various denominations of both old and redesigned banknotes to deposit money banks for circulation.
3. Preventing Panic Withdrawals:
   • Members of the public are advised not to engage in panic withdrawals and are encouraged to accept all CBN-issued banknotes currently in circulation. This is to ensure the smooth flow of economic activities.
4. Alternative Payment Methods Encouraged:
   • To reduce reliance on physical cash, the public is urged to embrace alternative modes of payment, aligning with the CBN’s cashless policy to enhance the efficiency of financial transactions.
5. Background of Redesign Policy:
   • The CBN had earlier planned to redesign specific denominations (N200, N500, and N1000 notes) and reduce currency circulation to promote cashless transactions. However, the short timeframe for implementation led to public concerns and a subsequent Supreme Court directive to retain the legality of old notes alongside their redesigned counterparts until December 31, 2023.
6. Economic Impact of Previous Policy:
   • The implementation of the redesign policy had repercussions, with estimates suggesting that the Nigerian economy suffered significant losses, underscoring the importance of effective currency management.

Expert Perspectives:

• Dr. Uju Ogubunka, President of Bank Customers Association of Nigeria: Acknowledges the CBN’s clarification, emphasizing that it aligns with the bank’s role as the issuer of Nigeria’s currency. The statement is viewed as reassuring and dispels any doubts regarding banknote legitimacy.
• Victor Olojo, National President, Association of Mobile Money and Bank Agents in Nigeria: While appreciating the CBN’s decision to retain both old and new notes, Olojo highlights potential confusion due to visual similarities between different denominations. He suggests a need for systematic corrections and a clear plan from the CBN regarding currency management.

Conclusion: The Central Bank of Nigeria’s affirmation of the legal tender status of all banknotes aims to provide clarity and alleviate concerns surrounding the transition to redesigned currency. This directive ensures the smooth flow of economic activities and urges the public to embrace alternative payment methods. As Nigeria navigates this transition, effective communication and systematic corrections will be crucial to maintain financial stability and confidence in the currency.

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