The Central Bank of Nigeria has moved to allay public concerns over the growing scarcity of lower-denomination naira notes, with Governor Olayemi Cardoso explaining that the development is a natural consequence of shifting consumer behaviour and not a policy decision to withdraw any currency from circulation.
Speaking on Tuesday in Abuja after the 306th Monetary Policy Committee meeting, Cardoso addressed mounting public anxiety over the noticeable absence of N100 and N200 notes in daily transactions. He insisted that all existing denominations remain legal tender and that Nigerians should continue to accept them without hesitation.
The question as to why we do not have as many of them in circulation as may be perceived is a question of demand and supply, quite frankly, Cardoso said. The financial ecosystem is evolving in the direction we want it to, with greater financial inclusion and increased digitisation. As more people adopt digital payment channels, the demand for coins and lower-denomination notes naturally declines. If there is less demand for them, there is less need to print and circulate them in large quantities.
The CBN governor noted that the country is gradually transitioning toward a cashless economy, a trend he described as both inevitable and desirable. He pointed to the recently unveiled Payments System Vision 2028, which sets ambitious targets for expanding financial inclusion over the next two years. According to Cardoso, the growing adoption of electronic payment channels is expected to further reduce the reliance on physical cash, particularly for smaller value transactions.
He also acknowledged that the depreciation of the naira has eroded the purchasing power of lower-value notes, making them less attractive for everyday use. Of course, we must also acknowledge that currency devaluation has affected the purchasing power of lower-value notes. That is a reality, he said. More importantly, however, as financial inclusion expands and digital payments become part of everyday life, fewer people will rely on these denominations.
Cardoso stressed that the CBN had not withdrawn any denomination from circulation, warning against the rejection of N100 and N200 notes by businesses and members of the public. Unless the central bank states otherwise, Nigerians should assume that all existing denominations remain legal tender, he said.
The MPC meeting also saw the committee retain the benchmark interest rate at 26.5 percent for the second consecutive meeting, against the backdrop of a 15.91 percent inflation rate recorded in June. Cardoso reaffirmed the apex bank’s commitment to achieving single-digit inflation despite external shocks that have slowed the pace of disinflation. He noted that while the CBN had recorded 11 consecutive months of declining inflation, unanticipated global developments had delayed the projected timeline for reaching the target.
Addressing the International Monetary Fund’s recent assessment that the naira is undervalued with a fair value of about N1,150 to the dollar, Cardoso reiterated that the exchange rate should be determined by market fundamentals rather than a fixed target. He expressed satisfaction with the current state of the foreign exchange market, noting that daily turnover sometimes exceeds $1 billion, reflecting growing confidence in the system.
The CBN governor also defended the recent revocation of licences of 46 microfinance banks, describing the action as necessary to protect depositors and strengthen regulatory compliance across the financial sector. He assured customers that banks yet to meet revised capital requirements remain under close supervision and pose no immediate risk.
Cardoso concluded by emphasising that the shift toward digital payments is a global trend that Nigeria cannot afford to ignore. The world is moving in a particular direction, and we won’t be left out, he said, while acknowledging that the transition would not happen overnight.
Abuja Network News
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