The president of the Nigerian Economic Society, Prof Akin Iwayemi, has said that until the Central Bank of Nigeria Act is amended, only a presidential directive can stop the apex bank from going ahead with the proposal to introduce N5,000 denomination into the economy next year.
CBN indicated recently that it actually got the presidential directive, just as the Senate summoned the governor, Mallam Sanusi Lamido Sanusi for clarification on the issue.
He observed that the law establishing CBN empowered it to undertake currency restructuring, in addition to issuance and management of the legal tender.
On whether the Senate overstepped its bounds, Iwayemi said, “the National Assembly has prerogative to make statements on their mandate. So, I cannot comment on that, but the CBN Act gives it the mandate that covers even this currency re-denomination except the Presidency stops it.’’
The economic expert also said that re-denomination of the currency in itself was not capable of inducing inflation.
He insisted “many people don’t understand the fundamentals of inflation and they ascribe so many things to the causal factors of inflation.
“I know that there are peculiarities in the Nigeria system that if you change denomination, some of our market women will also increase their prices. If you do not suffer from money illusion, denomination per se, should not really cause too much of a problem,’’ Iwayemi said.
He however, conceded that the apprehension by Nigerians was not unfounded given the CBN policy on “Cashless Nigeria’’ and e-Banking.
Even at that he said that until the CBN gave full reasons for its decisions, people were likely to make comments that were not accurate.
Speaking in the vein, a lecturer in Economics at the University of Ilorin, Mr Seun Fogbonjaiye, said that the Senate should not have stopped the CBN from exercising one of its core mandates and added that the N5,000 note would reduce the risk of carrying large amount of cash around.
Another economist, Dr Adekunle Olokun, pointed out that the CBN, in spite of having the power to restructure the currency, did not carry the Senate along in its decisions.
“A proposal should have been presented before the Senate as regards the introduction of the new currency denomination.
“If this had been done, the Senate would not have abruptly placed an embargo on the CBN from carrying out its plan.
“The use of the new currency will cause inflation. The introduction of the new currency will encourage carrying of cash around.
“Indeed this is a contradiction from the ‘cashless Nigeria’ that the apex bank declared recently,” Olokun, a former CBN employee, told NAN on telephone
Meanwhile, the CBN said yesterday in Abuja that it, indeed, received presidential approval on the proposed currency re-denomination before making the announcement public last week.
The CBN spokesman, Mr. Ugochukwu Okoroafor, said this in the wake of the senate directive to the apex bank ordering it to suspend its proposed introduction of N5000 note along with its currency redenomination policy.
Okoroafor also confirmed that the bank had received a letter from the Senate Committee on Banking, Insurance and other Financial Institutions on the directive.
Meanwhile, a member of the upper chamber of the National Assembly, Senator Mudasiru Oseni has disclosed that the senate will next week summon the Governor of the Central Bank of Nigeria (CBN),
Mallam Sanusi Lamido Sanusi to appear before lawmakers to give reason behind the introduction of the proposed N5, 000 note.
Senator Oseni also alleged that the apex bank Governor single-handedly planned the proposed introduction of N5,0000 note without the knowledge of the lawmakers.
Also reacting to the development pro-democracy group, the Committee for Democracy and Rights of the People (CDRP) cautioned the Central Bank of Nigeria (CBN) over the proposed new N5, 000 note to be introduced, just as it said that it would induce inflation in the society.
They also said that the step would add more pains and pangs on the common masses and urged the apex bank to retrace its step on the policy.
The group, in a statement signed by its National Coordinator, Comrade Amitolu Shittu which was made available to newsmen in Osogbo yesterday, described the plan by the bank as terrible, harsh and satanic.
Comrade Shittu maintained that the introduction of higher note would trigger inflation and added that it was an avenue to encourage politicians in the country to steal more money.
He said, “It is a terrible thing to introduce N5, 000 note to a fragile economic system that is not accountable to the people and I want to say that the introduction of N5,000 would definitely encourage inflation.