A former Deputy Governor of the Central Bank of Nigeria, Mr. Kingsley Moghalu has thrown his weight behind CBN’S planned introduction of the naira.
This is even as the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has warned if sure consequences if the CBN implements the decision.
Moghalu in a Facebook post said he fully supports the CBN action.
“I fully support the Central Bank of Nigeria redesign of the Naira. If 80% of bank notes in circulation are outside the banks, that’s troubling. The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender them to get new ones or else it becomes illegal tender after January 31 2023. This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation” he said.
He however joined other experts to suggest that persons who have star he’d illegal cash would approach the pararrel market to buy up Forex which will impact the naira negatively.
“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go the parallel forex market to buy hard currency, putting further downward pressure on the value of the Naira as too much Naira will be chasing too few dollars” he said.
On the impact on inflation he said: “I doubt it will solve inflation because there also are other major reasons for inflation such as the forex crisis, which this new move could exacerbate, as well as the impact of the security crisis on food price inflation.”
“But overall, this is a necessary step, including for national security reasons. I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general. A 90 day window would have been better, but one can understand the need to avoid interfering with the elections” he said