Moghalu declares support for redesign of Naira with reservations

The former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, on Friday explained why he fully supports the apex bank’s planned redesign of the Naira notes.

The CBN Governor, Godwin Emefiele, had on Wednesday announced that redesigned notes would be in circulation by December 15.

He added that the decision would inevitably contribute to the ongoing fight against insecurity ravaging the country.

Moghalu, who reacted to the move in a series of tweets on his Twitter handle, stressed that it was necessary for the CBN to gain control of the money supply in the country.

The former presidential aspirant, however, said the redesign of the Naira notes might not be an efficient strategy to combat inflation in the country.

READ ALSO: Naira falls heavily to N780 after CBN announcement to redesign naira

He wrote: “I fully support the Central Bank’s redesign of the Naira. If 80 percent of banknotes in circulation are outside the banks, that’s troubling. The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender to get new ones or else it becomes illegal tender after January 31, 2023.

“This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation.

“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go the parallel forex market to buy hard currency, putting further downward pressure on the value of the Naira as too much Naira will be chasing too few dollars.

“I doubt it will solve inflation because there also are other major reasons for inflation such as the forex crisis, which this new move could exacerbate, as well the impact of the security crisis on food price inflation. But overall it is a necessary step.

“I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general. A 90-day window would have been better, but one can understand the need to avoid interfering with the elections.”

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now