NAIRA SCARCITY : Latest CBN News Today 2nd May 2023

Following the Naira Scarcity in Nigeria, GoldenNewsNg has compiled Latest CBN News and Update on Naira Notes Today 2nd May 2023.

CBN Speaks on Plans for New Naira Notes as Banks, Nigerians Complain of Scarcity

CBN Clarifies: No Plans to Phase Out Redesigned Naira Notes, Despite Reports of Scarcity

The Central Bank of Nigeria (CBN) has issued a statement to refute reports that it plans to withdraw the newly redesigned N200, N500, and N1,000 notes from circulation. The apex bank’s clarification comes amid rising concerns about the apparent disappearance of the new notes, which have led to speculation and complaints from bank customers.

Acting director of corporate communications, Isa Abdulmumim, stressed that the speculation was unfounded and a strategy employed by certain groups to incite fear among the public. He also reiterated that both the old and new currency notes were being used concurrently and that the CBN was regularly receiving a substantial amount of updated banknotes from the Nigerian Security Printing and Minting Company (NSPMC) Limited.

The Redesigned and Old Notes Will Continue to Be Accepted as Legal Tender

Abdulmumim emphasized that the CBN remained committed to supplying the approved indent for the smooth running of the economy. He urged members of the public to disregard any report suggesting a phase-out of the redesigned currency and stated that the redesigned and old notes would continue to be accepted as legal tender. These notes would circulate side-by-side for transactions until December 31, 2023, when the old N1000, N500, and N200 banknotes would eventually be phased out.

Bank Customers Lament Over Counter Payment With Only Old Naira Notes

In an earlier report by GoldenNewsNg, bank customers lamented being paid over the counter with only old naira notes. This has led to concerns about the availability of the new notes in circulation. However, the CBN has reassured the public that the new notes are still in circulation and will continue to be so.

CBN pumps N701 billion back into circulation in March 2023 to ease cash at ATMs

In March 2023, Nigeria witnessed a 71.4% increase in its currency in circulation, reaching N1.68 trillion, compared to N982.1 billion recorded in the previous month, indicating an additional N701.4 billion added to the circulation. This information was tracked by Nairalytics from the Central Bank of Nigeria’s website. The surge in circulating currency is likely due to the Supreme Court’s judgment to reintroduce old notes into circulation, following a case brought to court by state governors who opposed the policy. Furthermore, currency outside the banking system also increased to N1.44 trillion from N843.3 billion, representing a 71.4% increase in one month, with about 86% of the circulating currency outside the banking system.

Despite the central bank’s adoption of contractionary measures, including raising the monetary policy rate by 650 basis points, from 11.5% to 18% per annum, between May 2022 and March 2023, to tame rising inflationary pressures in the country, the circulating currency continued to increase. The CBN’s approach included interest rate hikes, naira redesign, and encouraging a cashless policy to mop up excess liquidity from the economy. However, intense cash crunch and high costs of goods and services led to the failure of the naira redesign policy, triggering a massive cash scarcity.

As a result, the Supreme Court ruled to bring back old notes, leading to a surge in the amount of cash in the system. Nigeria’s money supply also rose to a record high of N54.6 trillion in March 2023 from N53.3 trillion recorded in the previous month. This was due to the increase in both components that make up the money supply (M3), Net Foreign Assets (NFA), and Net Domestic Assets (NDA). Credit to the private sector increased to N43.1 trillion, while credit to the government dropped to N27.5 trillion recorded in the previous month.

CBN Closes 31 Banks in Lagos and 72 Microfinance Banks Nationwide

The Central Bank of Nigeria (CBN) recently announced the closure of 31 banks in Lagos as part of a larger effort to strengthen the banking sector in Nigeria. This action was taken as a result of the banks’ inability to meet minimum regulatory requirements, and the CBN has emphasized that the closures are necessary to protect depositors and maintain stability in the financial system.

The CBN’s decision to close these banks is part of a broader effort to clean up the banking sector in Nigeria and ensure that banks comply with regulatory standards. In addition to closing these 31 banks in Lagos, the CBN also announced the closure of 72 microfinance banks across the country, bringing the total number of banks closed to 103.

While the closure of these banks may be disruptive in the short term, it is expected to have a positive impact on the Nigerian banking sector in the long term. By removing banks that are unable to meet regulatory requirements, the CBN is sending a clear message that it will not tolerate non-compliance and that banks must operate within the law. This, in turn, is likely to strengthen confidence in the Nigerian banking sector and attract more foreign investment.

In addition to closing banks that fail to meet regulatory requirements, the CBN has also taken other measures to strengthen the banking sector in Nigeria. For example, the CBN has established a credit registry to improve access to credit for small and medium-sized enterprises, and it has also introduced new regulations aimed at promoting transparency and accountability in the banking sector.

Overall, while the closure of these 31 banks in Lagos may be seen as a harsh measure, it is likely to have a positive impact on the Nigerian banking sector in the long term. By ensuring that banks comply with regulatory standards, the CBN is helping to promote stability and growth in the financial sector, which is essential for the overall health of the Nigerian economy.

LIST OF MICROFINANCE BANKS CLOSED BY THE CBN