Why the redesign of the Naira by CBN is necessary: Moghalu

According to , a former deputy governor of the Central Bank of Nigeria (CBN), the decision to redesign the naira notes is a “essential step” for the sake of the economy.

In a string of tweets he published on Friday, Moghalu declared his support for the choice.
He described how the CBN is attempting to exert control over the amount of money in the economy.

He declared, “I wholeheartedly support the Central Bank’s redesign of the Naira. “It’s concerning if 80% of banknotes in use are not issued by banks. It is clear that the CBN wants to compel the banking industry to accept all of those currencies.

After January 31, 2023, the notes will no longer be legal tender, thus holders must surrender them in order to get new ones.

As the nation struggles with rising inflation, this is also a way to remove money from circulation and restrict the money supply in an unconventional way.

The parallel FX market will be used by those who are hoarding large sums of money outside the banking system for illegal purposes, which would further impact the value of the naira as too many Naira will be chasing too few dollars.

“I doubt it will stop inflation because there are still other significant causes, such as the FX issue, which this new action may aggravate, and the effect of the security crisis on rising food prices.

Overall, though, it’s an essential step.

The window of opportunity for its implementation, in my opinion, is rather little. Commercial banks and the financial system as a whole will be under a lot of operational stress as a result. Although a 90-day timeframe would have been preferable, one can see the need to prevent political interference.