The Central Bank of Nigeria (CBN) has moved to quash rumors surrounding the legal status of previously demonetized naira banknotes, asserting that all banknotes ever issued by the central bank remain legal tender. The CBN, in a statement released on Nov. 8 via social media, dismissed reports of cash shortages in major Nigerian cities and emphasized that its branches nationwide are instructed to continue issuing various denominations of both the old and redesigned naira banknotes.
CBN statement refutes cash shortage rumors
The process of demonetization was initiated by the then-governor Godwin Emefiele, purportedly as a measure to counter the activities of parallel market foreign exchange dealers and currency hoarders. However, local media reports during the demonetization period raised speculation that the move was politically motivated, aiming to disrupt the campaign of then-presidential aspirant Bola Tinubu. The attempt by the CBN to demonetize old naira banknotes, without ensuring an adequate supply of the redesigned counterparts, was reported to have led to cash shortages.
Initially resistant to extending the deadline for demonetization, the CBN eventually yielded to public demand, reinstating the legal tender status of the demonetized banknotes. In its recent warning to entities and individuals refusing the old banknotes, the CBN reiterated that all denominations of banknotes issued by the central bank are legal tender. According to Section 20(5) of the CBN Act, 2007, the statement emphasized that no one should reject the naira as a means of payment.
The proactive measures and public caution from the Central Bank of Nigeria
The central bank also urged the Nigerian public to guard against panic withdrawals and encouraged the adoption of alternative modes of payment. The cautionary stance aligns with efforts to stabilize the monetary environment and promote confidence in the national currency. The CBN’s move to clarify the legal status of the naira aligns with broader efforts to maintain financial stability and address concerns within the economy. By dispelling rumors and affirming the acceptance of all issued banknotes, the central bank aims to ensure a smooth flow of transactions and discourage disruptions caused by unwarranted speculation.
The challenges faced during the demonetization process, including reported cash shortages and public resistance, underscore the delicate balance central banks must strike when implementing currency-related policies. Political implications and public perception can significantly influence the outcomes of such initiatives, necessitating careful planning and effective communication from monetary authorities. As the CBN works to reinforce the legitimacy of all naira banknotes, it remains to be seen how this proactive approach will impact public confidence and address lingering concerns.
The central bank’s call for vigilance against panic withdrawals reflects a broader strategy to foster stability and resilience in the face of economic uncertainties. The recent statement from the Central Bank of Nigeria serves to clarify the legal status of naira banknotes and dispel rumors surrounding their acceptance. The central bank’s commitment to maintaining the legal tender status of all issued banknotes underscores its dedication to financial stability and transparency in monetary operations. As the Nigerian economy navigates challenges, clear communication and proactive measures from monetary authorities become essential to instill confidence and foster a robust financial environment.
