THE Governor of the Central Bank of Nigeria,CBN, Mr. Lamido Sanusi, yesterday, intensified his campaign for the introduction of N5,000 note, by saying that comments by former President, Olusegun Obasanjo on the proposed currency restructuring was incorrect and showed that the former president is a bad economist.
Speaking at the Annual Conference of the Chartered Institute of Bankers of Nigeria, CIBN, in Abuja, Sanusi said Obasanjo’s comments came to him as a shock, considering the fact that it was during his tenure as president that majority of the country’s highest currency denominations were printed.
He said Obasanjo introduced more higher-denominations than any other president of the country and was surprised that he could condemn the proposed introduction of the N5,000 note. For more click on read more
According to Sanusi, those opposing the introduction of the N5,000 were ignorant of its benefits, adding that its introduction would lead to efficiency of the country’s payment system since the policy was targeted at a small number of Nigerians handling huge cash.
He said Obasanjo’s assertion that the introduction of higher bills would stimulate inflation, was not true, stating that if this assertion was true, Nigeria would have gone into extinction within the eight year period that Obasanjo introduced the N100, N200, N500 and N1000 notes.
He said: “This is an interesting country because my uncle or my father who was our former head of state, General Obasanjo, who we all know is a very successful farmer, is a very bad economist; especially for saying that the introduction of higher denomination will cause inflation and improve hardship.
“Obasanjo introduced N20, N100, N200, N500 and N1, 000. He had introduced more higher-denomination currencies in Nigeria than any other head of state.
“He did N100 note in 1999, he did N200 in 2000, he did N500 two years later and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy.
“It is wrong for somebody, like Obasanjo, who had done this to stand up and say introducing a higher denomination will cause inflation.
“We all know that we cannot have inflation by printing higher bills if you don’t increase money supply and this is simple economics.”
On the benefit of the restructuring of the currency, Sanusi said: “We are introducing coins for various reasons. First as part of cost management; the N5, N10 and N20 note have a very high frequency and we have to replace them every three months but the coins last longer.
“Second, we are working on a hypothesis that the reason Nigerians do not accept the coins is because they couldn’t buy anything with them and, maybe, if you give them coins that have value as a medium of exchange they would accept them.”
He said the introduction of the N5, 000 would enhance the store of value function of the naira.
“In the 1970s, when the N20 was introduced, it was the equivalent of $30. In 2012, when we would have introduced N5, 000 note, it will be the equivalent of $30.
“If you could buy $30 with one N20 bill in 1978, you now need 250 N20 bill to buy $30 and you would have had to print those 250 bills, pay for the paper, the ink, for the security features, for transportation, for insurance, for clearing, for the bullion van and processing and these are cost to the economy.”
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