Nigerian Economist Teriba Explains Why CBN Should Introduce N20,000, N10,000 Notes

Popular Nigerian economist and the Chief Executive Officer of Economic Associates, Ayo Teriba, has called on the Central Bank of Nigeria to introduce naira notes with higher face value like N10,000 and N20,00 saying it is the sensible way to drastically reduce pieces of Naira notes in circulation by the end of 2023.

Teriba urged the CBN to print N2,000, N5,000, N10,000 and N20,000 that will equal $4 and $50 notes to help it control printing of excessive numbers of currency notes.

The economist made the argument in a paper titled, ‘Naira Redesign, Supreme Court Ruling, and the Road Ahead’, which he confirmed to THE WHISTLER.

Over time, pieces of currency in circulation have grown from 2.6 billion pieces in 2006 to 9.75 billion pieces in 2021.

Teriba’s argument is premised on the naira redesign policy of the CBN where the bank introduced new N1,000, N500 and N200 bills and mopped up over N2.1trn in circulation.

The old notes will be withdrawn by December based on a Supreme Court ruling.

The economist argued that the implementation of the policy has been chaotic, adding that the best way forward was for the CBN to align the face value of naira notes with global values.

Teriba said, “The higher the face values of banknotes circulating in an economy, the fewer the number of notes that central banks, banks, businesses, and individuals must print, store, sort, distribute, carry about, and repeatedly count.

‘ Larger denomination notes are more portable, convenient, durable, and easier to carry about and repeatedly count than lower denomination ones. Higher denomination notes enable significant savings on costs of printing, counting machines, counting rooms, counting staff, and bullion van.

“Weakening of the exchange rate from N100/US$ when the redenomination decision was taken in 1999 to the range of N450/US$ and N750/US$ in the official and BDC windows respectively by 2022 meant the highest denomination note, N1,000 is now worth between one and two US dollars, leading to the printing of excessive numbers of currency notes.

“The pieces of Naira notes in circulation had exploded to 9.75 billion pieces by December 2021. Introduction of N2,000, N5,000, N10,000, and N20,000 notes that would be equivalent to US$4 to US$50 now is the sensible way to drastically reduce pieces of Naira notes in circulation to between half a billion and a billion pieces before the end of 2023.”

Teriba also advised the CBN to align face value of naira notes to retail prices.

“Repetitive and relatively small value transactions such as sweets, fruits, vegetables, nuts, snacks, meals, water, beverage, newspapers, haircuts, airtime, and transport fares now require the top two denominations of Naira notes.

“Less frequent, and relatively high-value transactions such as clothing, footwear, watches, cell phones, foodstuff, livestock, fuel, spare parts, airfares, and hotel accommodation now require multiple units of the top denomination note,” he added.

Meanwhile, the CBN governor, Godwin Emefiele, had last year during the introduction of the naira redesign policy revealed that higher denomination notes of N1,000 and N500 will not be allowed to be in circulation in large quantities to avoid hoarding of the currency.