Chairman, Chartered Institute of Bankers of Nigeria, Kwara State branch, Mr. Frank Akinola, has defended the planned introduction of N5,000 note by the Central Bank of Nigeria.
Akinola said during the Annual General Meeting of the CIBN in Ilorin on Monday, that the currency reform of the CBN would positively impact on the economy.
He said the reform and N5,000 note would rather reduce the quantum of money in circulation and also reduce inflation than increase inflation and money in circulation as being feared in some quarters.
According to him, it will reduce drastically the cost of minting of currencies as against the current cost.
Akinola said, “The policy is also in tandem with the cash-lite policy. The whole essence of the cash-lite policy is that we are moving away from the use of cash. We want to reduce the quantum of money in circulation such that we can do most of our transactions using electronic means to improve our payment system.
“Now that we are introducing N5,000, it is to further reduce the quantum of money in circulation and not to increase it. Now we need a large sum of money to make up N5,000 but when it starts, it will only be one note. It will even reduce the cash in the society.”
Akinola said the currency reform would lead to better handling of money.
He stated that a carrier of N5,000 notes, would likely be more careful and more conscious of the money he was holding because of the value.
According to him, Nigeria’s economy will be better for it.
He added, “The fear being entertained by many people is that it might lead to inflation. It will not lead to inflation. The quantum of money to be pushed into the economy is not going to be increased. It is only the denomination that is going to be increased.
“Since there is no increase in income there will not be increase in disposable income and there will be no inflation. It may even reduce the quantum of money in circulation.”
Akinola stated that the cash-lite policy would improve the payment system, reduce transaction cost of bank customers and also reduce processing cost of cash in the system.
He stated that the CBN spends a lot of money to process cash before it is given to the bank. He added that the cash-lite policy would reduce theft and loss of cash including armed robbery cases.
According to him, the policy will encourage the use of electronic banking. He stated that it would be in conformity with international best practices and would also assist regulatory authorities in achieving monetary policies.
He also said the current cheque truncation policy was a welcome development. He stated that it would reduce the transaction date of cheques. He added that the policy would increase liquidity in the system and make people have value for their money.