CBN Explains Scarcity of ₦100, ₦200 Notes

CBN Explains Scarcity of ₦100, ₦200 Notes

The Central Bank of Nigeria (CBN) says lower-denomination
naira notes are currently scarce due to growing adoption of digital payments
and changing currency demand.

 

Olayemi Cardoso, governor of the CBN, spoke on Tuesday after
the monetary policy committee (MPC) meeting in Abuja.

 

Cardodo said the scarcity does not mean the naira notes have
ceased to be legal tender.

 

The CBN governor said Nigerians should continue to accept
the N100 and N200 notes, adding that the apex bank had not withdrawn any
denomination from circulation.

 

 

“Yes, they remain legal tender. Unless the central bank
states otherwise, Nigerians should assume that all existing denominations
remain legal tender,” Cardoso said.

 

“As to why there appear to be fewer of these notes in
circulation, it is largely a matter of demand and supply. The financial
ecosystem is evolving in the direction we want it to, with greater financial
inclusion and increased digitisation.

 

“As more people adopt digital payment channels, the demand
for coins and lower-denomination notes naturally declines. If there is less
demand for them, there is less need to print and circulate them in large
quantities.”

 

 

He also said the declining purchasing power of lower-value
notes has contributed to their reduced use.

 

“Of course, we must also acknowledge that currency
devaluation has affected the purchasing power of lower-value notes. That is a
reality,” he said.

 

“More importantly, however, as financial inclusion expands
and digital payments become part of everyday life, fewer people will rely on
these denominations.”

 

On inflation, Cardoso said the apex bank remains committed
to achieving single-digit inflation despite external shocks that have slowed
the pace of disinflation.

 

 

“It is important to remember where we are coming from. We
recorded 11 consecutive months of disinflation and, from every indication, we
expected that by early 2027 we would be where we wanted to be in terms of
inflation, with a path towards single-digit inflation,” he said.

 

“Unfortunately, we have experienced external shocks that
were not anticipated and have lasted much longer than anyone expected.

 

“As for our single-digit inflation target, we remain
committed to it.”

 

Responding to the International Monetary Fund’s (IMF) recent
assessment that the naira is undervalued, with a fair value of about N1,150 to
the dollar, Cardoso reiterated that the exchange rate should be determined by
market fundamentals rather than a fixed target.

 

“Our position remains the same,” he said.

 

“We will continue to ensure that Nigeria has a foreign
exchange market that is transparent, liquid and based on a willing-buyer,
willing-seller framework.

 

“Where the exchange rate eventually settles depends on
market fundamentals. It is influenced by factors such as oil exports, foreign
direct investment, domestic productivity and import substitution.”

 

Cardoso also said the CBN is satisfied with the current
state of the foreign exchange market, adding that the country now “have a
functional, transparent and open market, on some days, market turnover exceeds
$1 billion, reflecting growing confidence”.

CBN Explains Scarcity of ₦100, ₦200 Notes

 - NigerianEye

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