Nigerian Central Bank Spent Over $1.8 Billion Managing Local Currency – Economics Bitcoin News
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In an appearance before Nigerian lawmakers, the Deputy Governor of the Central Bank of Nigeria (CBN), Aisha Ahmad, told the lawmakers that of the nearly $1.8 billion spent on managing the local currency, over 90% of that amount was spent on financing. costs related to the production of banknotes.
The increasing cost of maintaining the naira
According to the Deputy Governor of the Central Bank of Nigeria (CBN), Aisha Ahmadi, between 2017 and 2021, the apex bank spent close to $1.8 billion or 800 billion naira to manage the local currency. The production of new banknotes alone accounted for more than 90% of this figure.
According to remarks published by Punch, Ahmad also recently claimed before Nigerian lawmakers that the cost of maintaining the local currency has increased by more than $22 million annually. Before Ahmad’s announcement, Kingsley Moghalu, a former deputy governor of the CBN, had also told lawmakers that the central bank spends about $336 million to manage the currency.
Apart from incurring high costs associated with managing the naira currency, the CBN has to face the increased risk of counterfeiting, according to the report.
Meanwhile, Ahmad, in a statement, partly blamed the rising costs on what he characterized as wholesale buying of the naira by the Nigerian public.
“The observation supported by statistics shows that non-bank cash is more than 80 percent of the money in circulation; worsening [the] there is a shortage of valid banknotes in circulation. This foreshadows [a] negative general perception of the bank and is increasing [the] a threat to the stability of the financial system,” Ahmad said.
To help the central bank deal with some of the challenges identified by Ahmad, the CBN launched the new naira notes on December 15. Meanwhile, the bank said Nigerians who are in possession of the old notes should return them on or before January 1, 2023.
CBN does not target politicians
The central bank has also limited the amount of cash withdrawn by individuals and companies. However, some Nigerian commentators have accused the CBN of so-called of using the naira redesign policy to target politicians. Responding to these allegations, Ahmad told lawmakers that the bank’s decision to limit cash withdrawals was based on research.
“I must make it very clear that the CBN is an independent institution and our decisions are based on research – it is the work of many teams working in different directories,” Ahmad said.
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