Nigeria to redesign N200, N500 & N1,000 notes and demonitize old notes Jan 2023
66 sats \ 6 comments \ @KenyaCoin 26 Oct 2022 bitcoin
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0 sats \ 0 replies \ @KenyaCoin OP 26 Oct 2022
Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency: The current form or forms of money is or are pulled from circulation and retired, often to be replaced with new notes or coins.
https://en.wikipedia.org/wiki/Legal_tender#Demonetization
A famous example of demonetization occurred in 2016 when India demonetized 86% of its nation's currency.
Demonetization: Meaning, Example, and How It Works https://www.investopedia.com/terms/d/demonetization.asp
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0 sats \ 0 replies \ @KenyaCoin OP 29 Oct 2022
Almost immediately following this announcement, the value of the naira started falling, about 3.5% within two days. People are moving their expiring bank notes into dollars. But since the foreign currency dealers (also known as bureaus de change / BDCs) are not permitted to obtain dollars or other foreign currency from the banking networks, this new demand for dollars will likely push the "parallel market" rate (the "free market" rate) even higher.
However, following the latest announcement, politicians have approached BDC operators to easily convert their soon-to-expire stockpiled naira to foreign currencies, as the apex bank gave all Nigerians six weeks to return all old naira notes to the bank’s vault.
Dollar hits N785 as politicians flood BDCs with expiring naira notes https://gazettengr.com/dollar-hits-n785-as-politicians-flood-bdcs-with-expiring-naira-notes
Some will move those funds into bitcoin, stablecoins and other cryptocurrencies as well.
Also see a related post, found here on SN, on the naira valuation drop:
The Nigerian naira plunges to a record low against the dollar #86975 https://www.bloomberg.com/news/articles/2022-10-28/naira-hits-record-low-after-central-bank-plan-to-replace-notes [Archive]
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0 sats \ 1 reply \ @KenyaCoin OP 27 Oct 2022
Here's another article on this development, from Bloomberg:
Flight to Dollars a Risk as Nigeria Replaces High-Value Currency https://www.bloomberg.com/news/articles/2022-10-27/flight-to-dollars-a-risk-as-nigeria-replaces-high-value-currency [Archive]
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0 sats \ 0 replies \ @KenyaCoin OP 29 Oct 2022
Also, Bloomberg put out an article with a response from the IMF:
The short period “could create huge operational pressure on banks and some traders may prematurely reject the existing currency notes once the new ones come into circulation,” Kingsley Moghalu, former deputy governor of the central bank, said by text message.
An estimated 45% of adults in Africa’s most populous country dont’ have a bank account.
Kazeem Olayiwola, 44, a commercial taxi driver in the capital, said he was concerned about the time he will have to spend in line to change the notes.
“Standing in queue for hours will cost me money that I am trying to make,“ Olayiwola said.
IMF Urges Caution in Nigeria’s Currency Notes Redesign Plan https://www.bloomberg.com/news/articles/2022-10-28/imf-urges-caution-in-nigeria-s-currency-notes-redesign-plan [Archive]
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0 sats \ 0 replies \ @KenyaCoin OP 27 Oct 2022
Sure wish I could edit the title of this post. Demonetize, not demonitize.
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0 sats \ 0 replies \ @KenyaCoin OP 26 Oct 2022
Nigeria's central bank is also making a hard court press to (eventually) become cashless:
CBN Begins Enforcement Of 100% Cashless Economy Today https://independent.ng/cbn-begins-enforcement-of-100-cashless-economy-today
This includes providing a subsidy for a specific use of the eNaira CBDC:
Shunned CBDC Looks for Street Credibility in Nigeria #85474 https://www.bloomberg.com/news/articles/2022-10-25/shunned-digital-currency-looks-for-street-credibility-in-nigeria [Archive]
Last week they (Central Bank of Nigeria, or CBN) announced a domestic card payments network:
By launching a card payment scheme, Nigeria will join the likes of India, Brazil, and Turkey, all of whom have domestic card payment schemes.
The CBN wants to create ATM cards, could compete with Mastercard, Visa, and Verve https://techpoint.africa/2022/10/26/cbn-domestic-card-scheme
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