The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, Wednesday said the central bank may go back to its earlier plan to redesign the naira in order to forestall massive counterfeiting of the nation’s currency.
Sanusi disclosed this at a meeting with the House of Representatives Committee on Banking and Currency, to deliberate on the alleged increased cases of Automated Teller Machines (ATMs) dispensing fake banknotes in some parts of the country.
The meeting followed the referral of three motions dealing with various issues including the indiscriminate charges imposed on bank customers and the prevalence of high interest rates and its impact on small scale businesses.
Sanusi argued that while the occurrence of fake banknotes being dispensed by ATMs was rare, it underlined the need for periodic redesigning of the currency of a country.
He however stressed the rate of occurrence of counterfeit banknotes at ATMs was low because the monies loaded into the machines were usually processed and screened prior to their lodgment.
Sanusi disclosed that out of the processed banknotes in circulation, there were only a small fraction of them that were counterfeit.
The CBN governor explained: “In terms of fake banknotes, we recorded about 3.9 per cent in 2007, six per cent in 2008, 8.4 percent in 2009, 7.4 per cent in 2010, 5.4 per cent in 2011 and 8.4 percent in 2012.
“One of the reasons we wanted to have a restructuring of the redesign of the currency a few months ago was because as explained, many of our notes had been in existence for upward of eight or even ten years. Now best practice is that within a period of five to eight years you redesign the currency because after that period counterfeiters tend to catch up
Continuing, he added: “Now unfortunately the redesign policy suffered because of all the noise around N5,000 and therefore it is being delayed because that is what would have made it impossible for counterfeiters to cock so they have to wait for another five, six, seven years before they learn how to counterfeit by which point , the CBN should be redesigning the notes again.
“So I suppose that at some point the country would have to revisit the issue of redesigning the notes but at the moment based on popular demands, we have had to step down the redesign.”
On lowering interest rates, Sanusi said it would not be possible to force down interest rate in an economy that is dependent on imports.
He explained delivering a low rate of interest regime would have been the easiest thing to do because the CBN prints money, saying interest rates come down when you have a lot of money and that is not a problem.
Sanusi further said the central bank could crash interest rates to two percent, by simply doubling and tripling the money supply in the system, but maintained that such moves would not help the economy.
“How low do you have to bring down the interest rate to make banks lend to a company that has no steady power supply and other infrastructure required for sustained industrial growth and profitability? How low can the interest rate be for the banks to lend to a tomato farmer, who will lose 50 per cent of his produce due to lack of storage and processing facilities?
“The likelihood of interest rate coming down under the current economic climate is very remote. In fact, there is more likelihood that interest rate will go up than go down,” Sanusi said.
THISDAY
© dARA for Royal Times of Nigeria Newspaper, 2013. |
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posted in Business by Tunde LEMUEL