The Central Bank of Nigeria (CBN) has announced the reversal of the December deadline for the withdrawal of old naira notes from circulation. This means that the old designs of N200, N500, and N1,000 denominations will remain legal tender alongside the new ones until their gradual phase-out. The decision is in line with international best practices and aims to prevent panic withdrawals and cash scarcity. The CBN is also working to set aside a subsisting court ruling that instituted the December deadline.
Key Points:
- Reversal of Deadline:
- The CBN has reversed the December deadline for the withdrawal of old naira notes from circulation.
- Old designs of N200, N500, and N1,000 denominations will continue as legal tender alongside the new ones.
- Court Ruling:
- The CBN is working with relevant authorities to vacate a subsisting court ruling that mandated the December deadline.
- International Best Practices:
- The decision is in line with international best practices to prevent panic withdrawals and cash scarcity.
- It aims to ensure a gradual phase-out of old naira notes without causing disruptions.
- Bank Customer Reactions:
- Fears of a potential cash scarcity led some bank customers to make panic withdrawals.
- Commercial banks reduced cash withdrawal limits in anticipation of increased demand as the December deadline approached.
- Encouragement of Alternative Payment Modes:
- The CBN encourages the general public to embrace alternative modes of payment, such as e-channels, for day-to-day transactions.
- Legal Tender Status:
- All banknotes issued by the CBN will continue to remain legal tender, adhering to Section 20(5) of the CBN Act 2007.
Conclusion:
The CBN’s decision to reverse the December deadline for the withdrawal of old naira notes aims to maintain stability in the financial system and prevent disruptions caused by panic withdrawals. The encouragement of alternative payment modes aligns with global trends in promoting digital and electronic transactions. The gradual phase-out of old naira notes will proceed without imposing an immediate deadline, allowing for a smoother transition in the circulation of currency.
