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.