Governor of the Central Bank of Nigeria, CBN, Malam Sanusi Lamido Sanusi yesterday expressed dismay that the apex bank’s decision to introduce the N5000 note met stiff resistance from Nigerians despite the inherent benefits.
Speaking with newsmen on the sidelines of the 2013 World Bank/International Monetary Fund, IMF, annual general meeting in Washington DC, Mr. Sanusi argued that if it was his decision to make, the N5000 notes would have been printed, saying it made good economic sense for the country to print higher denominations because it would curb spending on minting currency notes.
“If it was my decision, you would have 5000 notes. If you like, don’t take it,” Sanusi said.
Nonetheless, he said the idea, which was proposed last year has been rested after the Federal Government bowed to pressure from Nigerians and a National Assembly resolution.
“I have heard people say (the N5000 note) will encourage corruption. Well, you are having corruption in dollars but you do not want to have it in naira. I have heard all sorts of silly arguments (that) it will cause inflation, which I have never seen any kind of economic basis for that kind of argument,” he said.
“People got up, made statements, professional, institutions, accountants (that) this is inflationary. I don’t know when accountants became economists; I don’t know when changing denomination became the same as increasing money supply. But in a country in which the decisions are not taken based on the soundness of an argument but on sentiments, I can’t help it. If Nigerians would rather carry Ghana-Must-Go bags on their backs, that is fine. If they would rather we continue spending money printing these notes that is fine.”
He added: “I made all the arguments at the time I made them. You have had inflation in double digits for a very long time, (and) this has weakened the purchasing power of the national currency and therefore means you are carrying much more currency than you need to carry to carry out your transaction.
“You go to an ATM, you want N100,000 you have to take 100 notes. Those notes have a cost and printing those notes you are paying for the paper, paying for the security features, paying for transportation and paying for security while transporting them. And then the CBN is going to make for destruction of these notes…. So the economic fundamentals are clear to me, if your currency loses value, printing higher denomination makes economic sense.
“Think of the bullion van, the fuel, the security, the printing, it was very clear to me and very clear that the people who were arguing had no argument. But we had a National Assembly resolution; we had Nigerians threatening to march and the decision is not a CBN one, but a government decision. So if the government suspends it, it suspends it,” Sanusi said.
He also defended the apex bank’s directive to commercial banks that foreign currency transfers must be paid in Naira, saying this was in line with best global practices. Prior to the implementation of this policy, transfers made to Nigeria were paid by the banks in the currencies they were sent to the recipient.
But according to Sanusi, “There is nowhere in the world where you go to a bank and because you got a transfer, you insist on being paid in that currency. If you are in Japan you get paid in the Japanese Yen; if you are in China, you get paid in Yuan; so there is no way”.
He said the previous system was introduced when banks were discovered to be shortchanging customers by using less than the prevailing exchange rate.
“Now we have said that the exchange rate must be exactly the exchange rate of the inter-bank of the particular date of exchange and the banks are required to display the exchange rate in the banking hall. I don’t see how the bank can continue with a policy that is not consistent with global practices and continue importing dollars and basically saying that we don’t have confidence in our currency,” he said.
On the shutdown of the U.S government as well as the looming debt default, the CBN governor explained that unless the impasse was resolved quickly, developing nations would be affected especially Nigeria, which has most of its reserves invested in US Treasury Bills and Bonds.