Emefiele to Reps: “Of N3.23trn in circulation, N2.7trn was out of the banking system”

CBN Governor, Emefiele says apex bank will continue to redeem old naira notes at their expiration as legal tender. Promises to obey the law

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has given the assurance that the value of old naira notes of 200, 500 and 1000 will still be redeemed even after the February 10 expiration deadline.

He said the redemption was in tandem with the law, precisely Section 20 (3) of the CBN Act, noting the essence was to mop up the old notes in circulation.

Emiefele gave the assurance when he appeared before the House of Representatives Ad-hoc Committee on the cashless policy of the apex bank on Tuesday. He equally said the CBN has nothing against the position of the law on the policy.

Nonetheless, the assurance doused the heightened tension amongst the members of the Committee as they heaved sighs of relief and the majority of the members were observed beaming with smiles. However, the apex bank blamed the commercial banks for giving out new naira notes to persons of influence who spray during parties.

“I’m disappointed with the commercial banks, the new naira notes are being used in parties instead of achieving the aim of which it is meant for. We had to bring in ICPC (the Independent Corrupt Practices and other related offences Commission) and the EFCC (Economic Financial Crimes Commission) to collaborate with us in monitoring this process and it has been successful. The exchange rate will soon be stable, and the naira note is getting stronger. It is a pain to most of us, but I enjoin Nigerians to endure with us,” Emefiele said.

READ ALSO: Naira Swap: “10-day extension is not the solution” – Reps to CBN

Earlier in his opening remarks, Chairman of the House Committee, Rep. Alhassan Ado Doguwa, berated Emefiele for shunning its invitations severally.

“When a Committee of this nature is seated, it is based on the mandate of the House. At this point in time, the CBN embarked on a policy to switch the old naira, and we felt as a House to interface with you to get facts and report back on the floor of the House.

We wanted to hear from you first; being the regulator of the institution. At the moment, we have extracted some information from the commercial banks already. Our main concern is the critical condition of our economy. We also have the constitutional backing to invite any individual or agency to appear before us to explain or give details on certain issues affecting our people.

We are not in doubt that this policy is a good policy, but when the policy is causing discomfort and crises within then, we need to have a rethink. Why this time, why come up with such a policy with less than three weeks to the general elections. We also want to hear from you while you turned down our invitation severally,” the lawmaker demanded.

READ ALSO: Ways and Means: Senate blames CBN Governor, Finance Minister over delay in approval

In his response, Emefiele noted that it was not deliberate,  “Let me apologise for my inability to be here. It is not my intention to undermine the parliament. I was out of the country, however I had send some officials to represent me. We have done our best with your cooperation in ensuring that the CBN remains one of the best in the world.”

Speaking on ongoing efforts aimed at ensuring adequate control and monitoring of the currency in line with the CBN Act 2007, he observed that in 2015, the currency in circulation, which stood at N1.4 trillion, rose to N3.323 trillion as of October 2022, showing over 100 per cent increase within a period of seven years.

“Besides, the general practice across the globe and that practice is that every 5 to 8 years, the CBN is supposed to redesign or do some form of changes do its currency. The reason is because CBN has to be in the position from time to time to have control of money supply in the country. Unfortunately, we have not had the luxury of carrying out this important aspect of our mandate in the last, almost 19 years to the extent that in 2015, the currency in circulation was N1.4 trillion.

READ ALSO: “500m pieces of redesigned naira notes to be distributed nationwide” – CBN

In October 2022, currency in circulation had risen to N3.23 trillion. More than double in 7 years. It’s very, very unfortunate that it more than doubled in 8 years. Out of the N3.23 trillion, more than N2.7 trillion was outside the banking system. More than N2.7 trillion is held in people’s homes. What that does is that it makes our mandate of monetary policy very difficult.

When we are not in control out of N2.3 trillion, what we see in the banking system is just about N500 billion. There is no how our law, which you, the lawmakers, have made for us to carry out, our work cannot be effective, and that is the reason,” he added.

Elated by the remarks, Chairman of the Adhoc Committee, Rep. Ado Doguwa, thanked Emefiele for the assurance earlier given; stressing that the long gap in communication caused the panic and heightened attention.