The Central Bank of Nigeria (CBN) has introduced new banknotes and withdrawal limits as part of its monetary policy reforms. The new notes, which came into effect on December 15, 2023, are designed to curb counterfeiting, promote a cashless economy, reduce the circulation of dirty notes, discourage hoarding, and prevent crimes and illicit financial transactions.
According to the CBN, the new banknotes have enhanced security features and are more durable than the old ones. The bank also imposed limits on the amount of the new banknotes that can be withdrawn per week. Individuals can withdraw up to N500,000 ($1,111) and corporations can withdraw up to N5 million ($11,111) from their accounts. The bank said the limits are meant to encourage the use of electronic payment channels and reduce the cost of cash management.
The CBN governor, Olayemi Cardoso, said the monetary policy reforms are aimed at supporting the banking system development and the economic recovery from the COVID-19 pandemic. He said the bank will continue to use the Monetary Policy Rate (MPR) as its key instrument for signaling its policy stance and managing inflation and exchange rate pressures. The MPR was lowered by 100 basis points from 13.5 to 12.5 per cent in May 2020, and has remained unchanged since then.
The monetary policy reforms have been met with mixed reactions from the public and the stakeholders. Some analysts have praised the CBN for taking bold steps to modernise the currency and foster a cashless economy. They said the reforms will improve service delivery, enhance financial inclusion, and facilitate effective monetary policy implementation.
However, some critics have questioned the timing and the rationale of the reforms. They argued that the withdrawal limits are too low and will impose hardships on Nigerians, especially the poor and the informal sector operators who rely on cash transactions. They also expressed concerns that the reforms will create liquidity problems, fuel inflation, and trigger exchange rate volatility. Some also speculated that the withdrawal limits are politically motivated to discourage vote-buying during the upcoming elections.
The CBN has assured Nigerians that the reforms are in their best interest and will not adversely affect their economic activities. The bank said it will monitor the impact of the reforms and make necessary adjustments as the situation warrants. The bank also urged Nigerians to embrace the new banknotes and the cashless policy, and to report any cases of counterfeiting or abuse to the appropriate authorities.
