The Senate Monday overruled the Central Bank of Nigeria (CBN) and Governor Sanusi Lamido Sanusi on its planned new currency policy and directed the apex bank to stop plans to introduce a single N5000 note with immediate effect. The Senate also warned that such policy that has far reaching implication on the people must not be embarked on without the knowledge of the Senate and other stakeholders adding that until it is done, the CBN must stop action.
The Senate’s position was announced through its Chairman, Senate Committee on Banking, Currency, Insurance and other Financial Institutions, Senator Bassey Otu (PDP, Cross Rivers, South). He told the press at a conference in Abuja, that the Senate is asking and is indeed sending a letter to the CBN to stop all further actions and printing of the new N5,000 note until the Senate of the federal Republic has been properly briefed. He further said the new policy is scary and would send wrong signals to both the domestic and international business communities.
Recall that the opposition party, the Action Congress of Nigeria (ACN), Labour unions and analysts have urged the CBN to jettison the proposed new currency plan saying it will hurt the local economy and spiral inflation. Senator Otu said “the Senate believes that this type of action is only taken where there is a major crisis and the CBN must be very careful in order not to send a wrong signal to various households, domestic sectors and even the external ones that the Nigerian currency is valueless, of which I believe it is definitely not and that for every unit of value they need to carry a large quantity of cash.” He further stated that, “As a committee we should do our work, there is a burning issue as of this morning that is going on in our country and there is need for us as a committee to comment on this topical issue. I am the chairman of the senate committee on banking, currency and other financial institutions. We have also read in the papers just like you about the currency restructuring that the CBN embarked on. I believe that a project of this nature requires parliamentary approval because there are numerous and fiscal implications on the entire economy”.
CBN in 2008 and 2009 came up with a proposal to re-denominate the currency, that was even to take off the zeroes. Now in 2012, a different kind of policy is seen somersaulting even though the dynamics of the sector are very well understood. CBN will have to prove that the policy is not a clear contradiction or at variance with a cashless society, which they are even yet to justify and whether this is the popular economic way to go.