Cardoso attributes scarcity of N100, N200 notes to digital payment growth, reduced purchasing power

ABUJA — Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has attributed the apparent scarcity of N100 and N200 notes to the increasing adoption of digital payment channels and the declining purchasing power of the lower-denomination currency.

Speaking on Tuesday after the Monetary Policy Committee (MPC) meeting in Abuja, Cardoso dismissed concerns that the affected notes had been withdrawn from circulation, stressing that they remain legal tender and should continue to be accepted for transactions across the country.

He said the CBN had not announced the withdrawal of any naira denomination and urged Nigerians not to reject the lower-value notes.

“Yes, they remain legal tender. Unless the Central Bank states otherwise, Nigerians should assume that all existing denominations remain legal tender,” Cardoso said.

Explaining the reduced circulation of the N100 and N200 notes, the CBN governor said the situation reflects changing demand patterns within the financial system rather than any deliberate policy to phase them out.

According to him, the expansion of financial inclusion and the widespread use of electronic payment platforms have significantly reduced reliance on physical cash, particularly lower denominations.

Cardoso also noted that the depreciation of the naira has eroded the purchasing power of the smaller notes, making them less useful in day-to-day transactions.

“As to why there appear to be fewer of these notes in circulation, it is largely a matter of demand and supply. The financial ecosystem is evolving in the direction we want it to, with greater financial inclusion and increased digitisation,” he said.

“Of course, we must also acknowledge that currency devaluation has affected the purchasing power of lower-value notes. That is a reality.

“More importantly, however, as financial inclusion expands and digital payments become part of everyday life, fewer people will rely on these denominations.”

On inflation, Cardoso reaffirmed the apex bank’s commitment to restoring price stability and achieving single-digit inflation, despite recent global economic shocks that have slowed progress.

He recalled that Nigeria had recorded 11 consecutive months of declining inflation before external factors disrupted the disinflation trend.

“It is important to remember where we are coming from. We recorded 11 consecutive months of disinflation and, from every indication, we expected that by early 2027 we would be where we wanted to be in terms of inflation, with a path towards single-digit inflation,” he said.

“Unfortunately, we have experienced external shocks that were not anticipated and have lasted much longer than anyone expected.

“As for our single-digit inflation target, we remain committed to it.”

Reacting to the International Monetary Fund’s (IMF) recent assessment that the naira is undervalued, with an estimated fair value of about N1,150 to the US dollar, Cardoso maintained that the exchange rate should be determined by market forces rather than administrative targets.

He said the CBN would continue to support a transparent and market-driven foreign exchange regime anchored on a willing-buyer, willing-seller framework.

“Our position remains the same. We will continue to ensure that Nigeria has a foreign exchange market that is transparent, liquid and based on a willing-buyer, willing-seller framework,” he said.

“Where the exchange rate eventually settles depends on market fundamentals. It is influenced by factors such as oil exports, foreign direct investment, domestic productivity and import substitution.”

Cardoso added that the apex bank is satisfied with recent developments in the foreign exchange market, noting that improved liquidity and stronger investor confidence have enhanced market performance.

According to him, Nigeria now operates a functional, transparent and open foreign exchange market, with daily turnover exceeding $1 billion on some trading days.

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