Sanusi's Central Bank & PGEJ Administration ( friend or foe) ?
First published: 3 September 2012 at 22:19
Background :
An assortment of store of value Including cowries and Manila for exchange of goods and services .
1st of July 1959, the CBN issued the Nigerian notes and coinsand the West African Currency Board notes were withdrawn from circulation.
January 1, 1973, Naira and Kobo was introduced.Febuary11,
1977, the N20 note became the highest denomination of a bank note.
July 2, 1979, N1,5 & 10 notes were introduced 1991, the 50k & N1 were turned into coins
1999-2005; N100,200,500 &1000 notes were introduced.
Febuary 28,2007; N5,10,20,50 polymer notes were introduced.
Legal backing :The CBN has the mandate to issue and manage our legal tender currency.They are responsible for design,production,storage,distribution,and the disposal of unfit notes.They are required in line with best practices to review their nations currencies at intervals between 5 & 8 years according to the CBN.
What the CBN intends to do ?
The impending review exercise is aimed at achieving the following objectives:
(i) Upgrading the design of the entire existing range of currency denominations in order to enhance the quality and integrity of the banknotes;
(ii) Incorporating a more effective feature for the visually challenged;
(iii) Introducing new security features on the redesigned banknotes. The intention here is to enable us take ownership and control of the new features on the series and eliminate payment of royalties on patentedsecurity features ( why are they paying royalties on this and to whom?)
(iv) Achieving an optimal currency structure that will ensure cost effectivenessand balanced mix and utilization of all the currency denominations;
(v) Introducing new series of coins that would be generally acceptable forpurposes of transaction; and
(vi) Reducing the cost of production, distribution and disposal of banknotesby introducing a higher bill that would reduce the volume and cost of notes in circulation.
(vii) The savings would be channeled to provide incentives for the usage and acceptance of coins.
The effects :
Inflation : this will not directly cause inflation but our cash culture and history with such actions point to these facts. In that prices will be rounded up and all things priced in coins will be moved to be payable by notes
All denominations to be coined will be interred.
The costof N40billion at this time is indefensible given the failure of Soludo's polymer notes and the struggle by the government to fund its program's like the subsidy regime and the East /West road.
The lower cash processing cost for banks is not enough justification.
There are better alternatives to immortalise the women.
Why rely on a 2011 Presidential approval to expend N40billion when all unutilised funds are returned to the national treasure by December 31st and all unutilised approvals naturally should lapse too.
The coins willnot be used as there is no supporting infrastructure and they will be stolen and melted for other purposes as is the practice in the east.
The way forward:
A Gradual replacement of smaller denominations N 5,10,20,50 as most of them have become faded.
A complete eradicationof coins as there are no supporting infrastructure to expend them.
Encourageand compel lending by the banks to the real sector as the banks are not currently lending but seeking deposits all over the place. As local production which will strengthen and rev the economy.
Regulate the banks better and curb their sharp practices : this will eliminate bogus profits and liquidity.
Guarantee the welfare of the bankers as their employers continually flout their contract agreements.
Work towards making the N500 the highest denomination as this will force transactions to be made through banks.
The govt to ask the ICPC to askSoludo (1) why we still pay royalties on notes paid for? (2) Also ask Soludo why his polymer bills faded so soon despite his assurances ?
Some actions of Sanusi :
Know your customer( Good policy to discourage money laundry )
Revalidation of bankcustomers ( Good policy to discourage money laundry )
Unilateral Closure of all micro finance banks and later reversal of this decision : the sector suffered capital flight and has not recovered.
The bailing of 4banks with tax holders over a Trillion supposedly to save jobs and todaymost of the staff have all been fired by the banks.
Stopping banks from having Automated Teller Machines, ATMs, in non-branch locations after their huge investments and later reversing the policy at more costs .
The Cashless program withLagos fiasco which has seen frequent adjustment of the minimum amounts for withdrawal.
The AMCON charade that has created an over N4 trillion liability (almost equal to the annual Federal Budget!) through ‘bonds’ that can never be repaid; this has allowed all those who borrowed these funds to walk away clean at least for now.
The illegal and unconstitutional Islamic Banking program; which was used to overheat the polity as if the life of the nation depended upon it.
The huge margin of about 2500 basis points between average bank deposit rates and lending rates consequent of CBN’s failed monetary policies and its unwillingness to deal with it.
The failure to submita CBN budget to the NASSthrough the Minister of Finance, as all 31 government corporations (including the CBN) are required to do per provisions of the Fiscal Responsibility Act.
The derailmentof the CBN’s focus by so called ‘interventions’ in non-core statutory functions such as its investment in multi-billion Naira hotel and conference centre projects like that being planned for UNIJOS and Abuja and donations to victims of Bomb blast.
CBN’s dabbling into issues of fiscal policy through “special funds” thereby usurping the role of Ministry of Finance
The questionable acquisition of the four banks bailed out with public funds.
Why is the President keeping him???...(Acknowledgements)