THE REASONS WHY N5000 NOTE MUST STAND---CBN

In a phone call with one of his protégés named Suraj, the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, defended his decision to introduce a 5000 Naira note despite his introduction of the cashless policy which seems contradictory to his new policy. He also defended his decision to make the 5, 10 and 20 Naira denominations into coins.

Below is the conversation between Sanusi and his protege;

My Conversation With SLS On The New Currency Policy

Aftermath of all the issues raised on my FB wall and elsewhere, I decided to hear directly from SLS on this issue of currency introduction and others. I am publishing these relevant parts and left out private matters

ME: (by SMS) Sir, I wouldn't know if you're free now so I can call. I have some issues I want your clarifications on regarding this new currency policy. Suraj

SLS: (called immediately) Suraj,
I am very busy today but...(line went inaudible)

ME: (by SMS) Let me raise my issues by SMS. MTN has been having reception issue here

SLS: (called) Suraj, I am very busy today. I have xxx meeting tomorrow and YYY meeting on Tuesday before travelling to ZZZ on Wednesday. But we can have the discussion by phone in few minutes

ME: OK sir. I just needed your clarifications on some of the issues my friends have been inundating me on this CBN new policy. First, don't you think it is counter productive that at this time that we are advocating cashless Nigeria, we are introducing another currency, a higher one, N5000.

SLS: See, Suraj. It is not. First, know that this is not a monetary policy but just currency management. Our cashless policy never says there should not be any cash at all. It only discourages heavy cash in the system. Whether in N5 notes or N5000 notes, the limit of N500,000 will still be N500,000. So what are we saying? It also enhances operational efficiencies. The number of times banks load their ATM machines will also reduce. Banks can now load up to 5 times the value in their ATM and reduces rate of stocking and associated costs. The cost of printing and managing currency will also reduce. We

ME (cut in): But sir, don't you think this will ease corruption and movement of funds among our politicians?

SLS: Well, is there no corruption now that there are no N5000 denomination? It is not the duty of CBN to fight corruption among political class, you know. We are trying our best to block all holes of corruption, but that doesn't stop CBN from introducing a currency management policy that it deems fit. Fighting corruption is the work of EFCC, Police etc

ME: Sir, what of the issue of inflation. Is it not inflationary?

SLS: All that are unproven talks. I have challenged people to bring any study or research that says higher denomination leads to inflation. Nobody has brought any. Look, it is inflation that brings about currency renomination, not otherwise. In the last 10 years we have been battling double-digit inflation in Nigeria.

ME: What of this scenario: an item that is worth say N4,800 will be forced to be rounded up to N5000?.

SLS: But we have not phased out N1000, N500, N200 now? So you mean it is only N5000 you can use to pay for a N4800 good? How have you been paying before? (laughter)

On coins, Suraj, at CBN we are forward-looking. Look, in the next few years, even when I must have left as governor, people will look back and realize this is a good policy. We are looking at not only currency management but also modernization. A time will come, in very near future, when we will be paying tolls, paying for newspaper vending, with just coins at vending machine points. That is why we are promoting coin culture now. Also note that, we are not cancelling the notes. We are introducing the coins side by side. So you will still have N20 notes, for example, with N20 coins, until it gains acceptability.

ME: Sir, have you been speaking to be the media on this issue?

SLS: Suraj, you know I have been on this job for more than 3 years and most times when I talk to the media, the matter is sensationalized and controverted, so I have deliberately minimized my interface with the media in recent time.

NB: He quoted some statistics at relevant points in time which I can't exactly recall and weeded out to avoid misquoting him.Pls share.



Written by Alaba Johnson (Reporter for NaijaPundit)