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Why Emefiele doesn't need to inform finance minister before changing naira notes

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A former deputy governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has expressed his support for the bank’s decision to redesign some of the country’s currency notes.

He also said the bank does not need the permission of the finance ministry or any other agency of government before making such a decision.

Mr Moghalu made the comment in an interview with Channels Television on Sunday.

The CBN Governor, Godwin Emefiele, on Wednesday, said the bank arrived at the decision to redesign N100, N200, N500 and N1000 denominations, following a request from the federal government.

He said the new notes will be in circulation from December 2022 while existing currencies will no longer be legal tender from January 31, 2023.

But the Minister of Finance, Budget and National Planning, Zainab Ahmed, on Friday, kicked against the policy, noting that she and her officials were neither informed nor consulted by the CBN.

President Muhammadu Buhari, through his spokesperson, Garba Shehu, on Sunday, said he indeed approved the redesign of the three largest denominations of the naira.

Naira Notes

This, he said, will reduce inflation, currency counterfeiting and the excess cash in circulation

Mr Moghalu also backed the CBN, noting that the decision is its statutory duty which does not need any external approval except that of Nigeria’s president.

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“They were affirming their statutory responsibility as the sole institution responsible for the issuance and management of the legal tender currency of Nigeria which is the naira. Note the emphasis on sole institutions, that responsibility is not shared with anyone else. So the CBN is doing its job in saying they have come to a judgment that the time has come to redesign the naira notes and there are a number of reasons behind that which I’m sure we will discuss.

“The ministry of finance does not oversee the CBN. It is part of the offices that oversee the economy. The Ministry of Finance, the Central Bank of Nigeria, national planning, the Ministry of Trade, Industry, and Investment. These are all parts of the government but the Central Bank of Nigeria, as the central bank of most civilized nations is or should be independent of any external influence. So, this is the context in which you will have to see what is going on.

“The central bank fulfills the requirements of it, which under the Act is that you cannot change the currency of the country without approval from the President. They sort the approval and they got it. And so I think they were well within their rights,” he said.

Mr Moghalu explained the two decision making phases in the CBN and the role of the federal ministry of finance.

READ ALSO: New Naira Notes: Finance minister kicks against plan, says ministry not consulted

According to him, there are two decision making bodies in the bank, namely the Committee of Governors, which include Mr Emefiele and the four deputy governors of the central bank and the board of directors.

On this board, he added, are five internal and seven external members, one of which is the permanent secretary of the Federal Ministry of Finance.

With this structure in place, Mr Moghalu said it is the duty of the permanent secretary of the finance ministry to brief Mrs Ahmed, not that of Mr Emefiele or any official of the CBN.

“The permanent secretary of the Federal Ministry of Finance must have been there. Did he or she, I don’t know who the permanent secretary is, not inform the minister that this sort of decision was taken at the board? I don’t know the answer to that. So there is an institutional mechanism and I’m sure it is respected. For if you are talking about going personally to brief the minister, it is not required and it is not necessary,” he said.

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