The Central Bank of Nigeria (CBN) has called on Central Banks within West African sub-region to safeguard banknotes, by initiating policies to prevent money laundering and counterfeiting, while adequately meeting the demand for money by the public.
The CBN Governor, Mr. Godwin Emefiele, made this known in a keynote address, at the opening session of a regional workshop on, banknote and currency management, organised by the West African Institute for Financial and Economic Management (WAIFEM), in collaboration with the CBN, in Abuja.
Speaking through his representative, the Deputy Governor, Operations, CBN, Alhaji Suleiman Barau, he said, “When confidence in the currency is strong, it fosters monetary and fiscal stability in the system, which is a precondition for achieving sustainable economic growth. “Forecasting the demand for banknotes is vital, as strategic management of currency is impossible without accurate forecasts of the demand for banknotes. A balanced approach to currency management reduces opportunity losses and enhances smooth functioning of the banking system”, he said.
He went on: “Currency management relates to planning, designing, issue and withdrawal of currency, ensuring its integrity, availability and the maintenance of quality. It is not only cumbersome with attendant complex logistic arrangements but also very expensive. For currency managers, note design presents a series of interlocking challenges. New design must win public acceptance, incorporate requisite security features and meet durability and machine processing standards. For example, some Central Banks have moved from paper substrate to polymer notes, in line with technological developments. “Polymer banknotes tend to be cost-efficient and durable. The proliferation of Automated Teller Machines (ATMs) also has a considerable impact on note design and sharpened the focus for both commercial and Central Banks. For example, the growing network of ATMs has affected the compositional shift from lower to higher denomination notes. In most cases, banks do not find it commercially viable to stock their machines with lower denomination notes, because they run out sooner and increase both capital and operating costs.” Also speaking at the occasion, the Director General of WAIFEM, Prof. Akpan Ekpo, said, “Integrity of a currency and its efficient supply are clear indicators of a well-functioning Central Bank. In the eyes of the people, this fundamental function of the Central Bank must be effective, efficient and present no issues that may hurt the reputation of a country. Our particular concern is the issue of counterfeiting, which is as old as money itself, and continues to present a potential danger to national economies and financial losses to consumers.
The major challenge to protect currencies from counterfeiting has increasingly become more dependent on partnership between law enforcement agencies, financial institutions and Central Banks, as well as with the security of printing industry, and high-grade supplier’s community. Meanwhile, WAIFEM also trained policy makers from the Central Banks of Ghana, Gambia and Liberia, Budget office in Nigeria, Federal Ministry of Finance Abuja, monetary policy department of the CBN, research department of CBN, Bauchi State Planning Commission, among other financial institutions in the sub-region, on basic econometric methods for policy analysis, held in Lagos.