The Central Bank of Nigeria (CBN) has taken significant steps towards phasing out the old N200, N500, and N1,000 naira notes in favor of the redesigned currency. Acting CBN Governor, Folashodun Shonubi, announced this development after the apex bank's Monetary Policy Committee (MPC) meeting in Abuja.
The move to phase out the old notes comes as the CBN increases the Monetary Policy Rate (MPR), which measures the interest rate, from 18.5% to 18.75%. The decision aims to manage the optimal level of currency in circulation and ensure that only new and efficient notes are in use.
Shonubi clarified that currency goes through a natural lifecycle, and over time, worn-out notes need to be replaced with new ones. As old notes are returned to the CBN and deemed no longer issuable, they are being replaced with the newly redesigned currency.
The process is carefully managed to maintain an optimal level of currency in circulation. The CBN is ensuring that the replacement of old notes with new ones is done gradually and without causing disruptions in the economy. Banks have been cooperating with the CBN's efforts, receiving and distributing the new notes as needed.
Last October, the now-suspended CBN Governor, Godwin Emefiele, announced the plan to redesign the three highest denominations of the naira and urged Nigerians to deposit their old notes before January 31, 2023, when they would cease to be legal tender.
However, due to economic challenges and public concerns, the deadline for the naira swap was extended by the approval of President Muhammadu Buhari. In March 2023, the Supreme Court ruled that the old N200, N500, and N1,000 notes would remain legal tender until December 31, 2023.
The phasing out of old naira notes is seen as a strategic move by the CBN to ensure the efficiency and security of the currency. By replacing worn-out notes with the redesigned ones, the central bank aims to foster a more reliable and robust financial system.
The CBN's decision is expected to have a positive impact on the economy, as the new currency will instill confidence in the financial system and promote a smoother and more streamlined process of financial transactions. As the old notes gradually make way for the new ones, Nigeria's currency will undergo a subtle transformation, providing a modern and updated representation of the country's financial strength.