The Central Bank of Nigeria on Monday defended the introduction of the N5,000 note, and argued that the new bill would complement the cash-less policy and reduce the cost of banking operations in the country.

The apex bank also said the N5,000 note would put the country ahead of currency counterfeiters. It added that its aim in the restructuring exercise was to secure the nation’s currency.

The Deputy Governor, Operations, CBN, Mr. Tunde Lemo, while addressing journalists at the 17th edition of the Association of African Banknotes and Security Document Printers conference and exhibition in Lagos, said the use of cash would definitely continue. Lemo represented the Governor, CBN, Mr. Lamido Sanusi.

He said, “Yes electronic banking is where to go because the increase in the volume of commercial activities in the last 10 years would definitely be in favour of electronic banking. But then cash will not go away. While others will be growing, the volume of cash in the system will remain the same.

“So when the press castigates us that we are speaking from both sides of the mouth, by talking cash-less and introducing higher denomination, our response is that we must be more efficient with the use of cash, because cash will not go away. Even though we know from empirical evidence and from all the research work that the volume of electronic activities will grow. So we are attacking efficiency from both ends and the two are not contradictory, rather they are complementary.

“The existing policy actually means that if you must carry a high volume of cash, you must pay the associated charges with the carriage of high volume of cash. But of course, the charges on electronic banking will continue to go down. As you would have imagined or discovered, banks are now reducing cost of electronic banking and they continue to have more transactions along that path.

Explaining how the introduction of N5,000 would help reduce overall cost of operations for banks, he said, “Now suppose you need to print – maybe one million N100 notes. You can actually reduce cost by printing them in N,5000 notes, because for every note of N100 you will need 50 of that to make N5,000. And of course, the cost differential is very minimal.

“So this is basically what we are saying; that at the high end, the volume of N1,000 that we are using today gives a compelling reason why some of it should be denominated in N5,000 so that we can reduce cost.”

Asked if it was the monetary policies of the CBN that was creating inflation or the introduction of the new notes, Lemo said, “Of course, we fight and will continue to fight inflation. The simple definition of inflation is too much money chasing too few goods. And we are saying that with the introduction of N5,000 we are not increasing money volume. We are only redistributing the percentages that will be in different denominations.

“We want Nigerians to carry less cash. As you see all over the globe, the volume of electronic activities is growing. But you cannot say we don’t want Nigerians to carry cash because people carry cash all over the world and they will continue to carry cash. And we are saying that the distribution and the structure of cash in Nigeria are inefficient.

“We spend humongous amount of money printing notes and currency and we can be more efficient with it by the introduction of N5,000. In carrying cash, we are talking about the volume, the value remains the same.”

Lemo argued that inflation warranted the halt in usage of coins in Nigeria, stressing that the restructuring would address this.

He said, “Inflation was what made those coins lose their relevance. Today we are having higher denomination coins and they will be useful, because of course, they will have value. You can bring two or three and board a bus; you can buy newspapers with about two, three or four of them. I want to say that we will not immediately take away N5, N10 and N20 notes. They will circulate side-by-side with the coins that we are introducing. So we leave Nigerians the option actually.”

Lemo argued that there was no inadequacy of the cash-less programme and that the bank was happy with the progress it had made on the policy.

Source: Punch/Okechukwu Nnodim