Changing of bank notes; any impact on economy?

[knowngunman]

The central bank of Nigeria (CBN) had made an announcement earlier last month on it plan to redesign Nigeria currency due to some numerous reasons which the most notable among is that, a larger amount of the country's currency is in circulation. So, in an attempt to reduce the money in circulation, the apex bank in the country (Nigeria) redesign the bank notes and issued a deadline for the old notes to be returned to the bank. It's not longer a news that NGN is traded at the rate of NGN700+ against USD1 in the black market while the official bank rate is around NGN450 per USD1. The Nigerian president, Muhammadu Buhari unveiled the new naira notes yesterday during the weekly federal executives council (FEC) meeting. during his speech, the president commended the CBN governor on this move and says the new naira will help strengthen the country's economy.
old note


new note


However, the Nigerian citizens expressed dissatisfaction and disappointment after the image of new naira notes goes viral in the social media. They claimed that the CBN dye and bleach the old notes and call it redesign. It's obvious that it's only the color that differentiate the old and new notes but that's never an issue if it can serve the purpose it was made for. The CBN however, justified its action by saying they're not after the beauty of the new naira and that it has features which the old one lacked. Apart from being more durable than the old notes, the new notes is more secure which will make it more difficult to produce counterfeit and also capable of strengthen the economy by reducing the money in circulation.
what's your take on this? Can the new notes actually strengthen the economy as claimed by the CBN? Your views please!

[The Sceptical Chymist]

Uh....this thread is almost exactly like this one, and I think the discussion has already been had.  Unless new members chime in, you're probably going to get the exact same answers.

You might want to consider just locking this thread up, OP.  Anyone please speak up if you disagree.

[_act_]

Either the government like it or not, dollar is going over $1000 very soon in black market, likely next year, slow growing economy has been a curse since independence.

The issue Nigeria has is the dependency on foreign nations than their own country, that is why unemployment rate has increased, people went to school but later either self-employed or they remain unemployed. Over 90% of graduates are not employed because no job. They should first tackle unemployment, making businesses of their own and how private industries can grow and develop to bring up more private industries, instead has been their old fashion way of thinking that can never help the economy.

what's your take on this? Can the new notes actually strengthen the economy as claimed by the CBN? Your views please!

It is all lies, do not mind the government, they will print money like in the past and they do not have to print more money before they will reduce the value of naira. In the past, money printing are controlled as the CBN was pleased with so would be these new notes.

Nigeria almost 75% export product is crude oil, still some are refined outside Nigeria and the oil are sold back to Nigeria
No car company
No other automobile company
Not producing phone, computer or any other latest technology
Ship are imported too, they lrodice none
As trees are numerous in Nigeria, they import common matches from India
They import generator, no company in Nigeria is manufacturing generator
They import tiles and many other building materials
Not electricity supply to favour companies, all depending on generators
Why won't many Nigerians live below the poverty line
Many people that are born in Nigeria as seen hell on earth

It is normal for a country to import, but if too much, it is not helping the economy and the cause of unemployment which Nigeria needs to tackle, but the leaders are not having the quality mindset and education to believe they can do it, but still always depends more than they should.

Uh....this thread is almost exactly like this one, and I think the discussion has already been had.  Unless new members chime in, you're probably going to get the exact same answers.

You might want to consider just locking this thread up, OP.  Anyone please speak up if you disagree.

I have written those before I saw your post, I think maybe this thread should be locked. But Nigerian government people like to deceive their citizens, see what the CBN said, that the new notes will help strengthen the economy which is contrary to what is on the thread on your link.

[Cryptomultiplier]

The central bank of Nigeria (CBN) had made an announcement earlier last month on it plan to redesign Nigeria currency due to some numerous reasons which the most notable among is that, a larger amount of the country's currency is in circulation. So, in an attempt to reduce the money in circulation, the apex bank in the country (Nigeria) redesign the bank notes and issued a deadline for the old notes to be returned to the bank. It's not longer a news that NGN is traded at the rate of NGN700+ against USD1 in the black market while the official bank rate is around NGN450 per USD1. The Nigerian president, Muhammadu Buhari unveiled the new naira notes yesterday during the weekly federal executives council (FEC) meeting. during his speech, the president commended the CBN governor on this move and says the new naira will help strengthen the country's economy.
old note


new note


However, the Nigerian citizens expressed dissatisfaction and disappointment after the image of new naira notes goes viral in the social media. They claimed that the CBN dye and bleach the old notes and call it redesign. It's obvious that it's only the color that differentiate the old and new notes but that's never an issue if it can serve the purpose it was made for. The CBN however, justified its action by saying they're not after the beauty of the new naira and that it has features which the old one lacked. Apart from being more durable than the old notes, the new notes is more secure which will make it more difficult to produce counterfeit and also capable of strengthen the economy by reducing the money in circulation.
what's your take on this? Can the new notes actually strengthen the economy as claimed by the CBN? Your views please!

My take on the matter is that one of the reasons why this will help bolster the economy is, it will first reduce the efficacy of counterfeit, it will checkmate horded and ill gotten cash stacked in hiding by those who can't speak of the means of how it was gotten, it will help close the gap between those who make genuine money vs those who do the opposite and lastly, it will create a euphoria of newness. People like new things, a new cash design is one new gift to the entire nation.

[Hydrogen]

Apart from being more durable than the old notes, the new notes is more secure which will make it more difficult to produce counterfeit and also capable of strengthen the economy by reducing the money in circulation.
what's your take on this? Can the new notes actually strengthen the economy as claimed by the CBN? Your views please!

The watermark looks different.

To answer the question, we look to past history.

Operation Bernhard of World War II fame was a nazi germany plot to flood, destabilize and destroy great britain's economy by flooding it with counterfeit bills that were indistinguishable from legitimate ones.

https://en.wikipedia.org/wiki/Operation_Bernhard

Years ago back in 2016, millions of counterfeit US currency was seized by the government.

$30 Million in Counterfeit U.S. Currency Seized in Historical Secret Service Operation

11-17-2016

On Nov. 15, 2016, the Peruvian government, along with U.S. Secret Service Agents, executed pre-dawn search and arrest warrants in Lima, Peru. More than 1,500 Peruvian National Police officers were involved in the operation. A total of 54 search warrants were conducted and 48 people were arrested.

Thirty million counterfeit U.S. dollars and 50,000 Euros were discovered during the operation. Additionally six counterfeit plants were suppressed, eight counterfeit manufacturing presses seized and over 1,600 printing plates and negatives of varying denominations were found.

https://www.secretservice.gov/press/releases/2016/11/30-million-counterfeit-us-currency-seized-historical-secret-service

If nigeria's economy is likewise being flooded by fake counterfeit bills as america, europe and other economies of the world are.

Then it could help protect their economy to switch up the printing process.

Counterfeit bills could also be a significant source of inflation if they're printed and distributed in high volume.

[Darker45]

First off, it really doesn't help the economy in a significant way. It doesn't increase the country's economic output in any way. It doesn't help push the GDP upward. It doesn't help in attracting foreign direct investment. It doesn't help increase the manufacturing and the production sector. This could go on.

But it helps a little. For example, if the existing design is very prone to counterfeiting, then perhaps changing it could avoid more fake bills coming into the circulation. Or if the materials used are becoming hard to find and expensive or low quality, then a shift to better, cheaper, and more abundant materials could save the government a good amount. It could also mean the bills in use are long-lasting. That also means savings.

However, just like in my country, it seems the changing of design is made for no other reason than merely changing its design. It often comes with a new set of leaders. It seems they only want to create their own design. This is completely absurd and is definitely bad for the economy for many reasons.

[rokok lokal]

The outcome is easy to predict they will be less in value than the old ones. If the government realizes the power of money, they will use it wisely and not just to impress. They need to explore and analyze on how they can change the people's mindset in moving towards a more positive direction. I believe countries like Switzerland or USA are great examples of using their money wisely and effectively.

[avikz]

Redesign of a currency note has zero net impact on the economy. It will definitely carry a likeability factor but that's it! Nothing else will be achieved through the redesigning. It's not an e-commerce website where redesign will increase the trust and sales.

Nigerian government is probably taking advise from non-qualified people rather than an economist. Otherwise no country would have taken this path during the time of high inflation and global economic meltdown. Too hilarious!

[Upgrade00]

the most notable among is that, a larger amount of the country's currency is in circulation. So, in an attempt to reduce the money in circulation, the apex bank in the country (Nigeria) redesign the bank notes and issued a deadline for the old notes to be returned to the bank.

From the reports I have read on this topic, the currency redesign is actually to boost the money in circulation, of which majority of it where unaccounted for. This means that the banks hold only a little of the nation's available cash, and out of those which are outside the bank, majority are hoarded, for different reasons, and are actually not circulating.

This and many other reasons brought about the new for the currency change.To answer your topic title, it doesn't have much of an economic effect imo.

[BIT-BENDER]

Firstly mate. I think the Nigerian Central bank embarrassed themselves if they can say what they did was the naira note Redesign. The official image of how the new note would be has been made public and has been greeted with a frown by Nigerian.

What is even funny is how some top directors of agencies in Nigeria feels that the new naira redesign would make the naira have value as to take its value which is at almost 800naira to a dollar to 200naira to a dollar.
I think it’s still all about corruption because the figures they have stated as the cost for the design is very much outrageous.

[Flexystar]

This does make difference and not just minor but mega difference.

Considering the fact that it will replace all the currencies available in the country it will take time to replace entire circulation with the new notes. This means people will have to either wait for the long time until they can effectively use the new currency since as soon as new notes are implemented they are going to be valid while others would be invalid.

This will dig out black money from the circulation and plus it will help reset the economy within the country if good amount of money is recovered and returned to the governments.

However, it has to be done planned and in step by step manner otherwise it could create chaos and disturb the line of action.

[Fortify]

The central bank of Nigeria (CBN) had made an announcement earlier last month on it plan to redesign Nigeria currency due to some numerous reasons which the most notable among is that, a larger amount of the country's currency is in circulation. So, in an attempt to reduce the money in circulation, the apex bank in the country (Nigeria) redesign the bank notes and issued a deadline for the old notes to be returned to the bank. It's not longer a news that NGN is traded at the rate of NGN700+ against USD1 in the black market while the official bank rate is around NGN450 per USD1. The Nigerian president, Muhammadu Buhari unveiled the new naira notes yesterday during the weekly federal executives council (FEC) meeting. during his speech, the president commended the CBN governor on this move and says the new naira will help strengthen the country's economy.

However, the Nigerian citizens expressed dissatisfaction and disappointment after the image of new naira notes goes viral in the social media. They claimed that the CBN dye and bleach the old notes and call it redesign. It's obvious that it's only the color that differentiate the old and new notes but that's never an issue if it can serve the purpose it was made for. The CBN however, justified its action by saying they're not after the beauty of the new naira and that it has features which the old one lacked. Apart from being more durable than the old notes, the new notes is more secure which will make it more difficult to produce counterfeit and also capable of strengthen the economy by reducing the money in circulation.
what's your take on this? Can the new notes actually strengthen the economy as claimed by the CBN? Your views please!

It depends what on underlying purpose that is driving the change really, it will have small effects but the government should definitely consider whether it is worth the cost of all the new banknotes printed out. If you look at counterfeiting for example, there are some highly professional criminals out there (and even countries like North Korea) doing this sort of forging on a large scale, so if your bank note security features are very weak then newer technological advantages could be very beneficial to preventing fraud. That seems to be the primary benefit you could get from a change, although you might get a sweep up of tax avoiders who have hoarded money in notes trying to cash in before the time is up.

[lionheart78]

I think it has some impact on the economy.  Changing bank notes help to stop the circulation of fake money.  This can bring inflation down at some point.  On a negative note, it will use the fund of the government, and changing notes needs huge amount of money because they have to pay for the design, materials, and production of the new banknotes.  This huge amount of money can be allocated to the development of the country's infrastructure or any profit-producing project that can help the economy way more than the idea of replacing the banknote.

If you look at counterfeiting for example, there are some highly professional criminals out there (and even countries like North Korea) doing this sort of forging on a large scale, so if your bank note security features are very weak then newer technological advantages could be very beneficial to preventing fraud. That seems to be the primary benefit you could get from a change, although you might get a sweep up of tax avoiders who have hoarded money in notes trying to cash in before the time is up.

It will only take months for the criminal group to counterfeit the new banknote, and at the end the scenario that is supposed to be fixe by changing banknotes will arise again in just a matter of month or two.  So I believe it is just a waste of government funds to change the banknote.

[Furious 7]

I think it has some impact on the economy.  Changing bank notes help to stop the circulation of fake money.  This can bring inflation down at some point.  On a negative note, it will use the fund of the government, and changing notes needs huge amount of money because they have to pay for the design, materials, and production of the new banknotes.  This huge amount of money can be allocated to the development of the country's infrastructure or any profit-producing project that can help the economy way more than the idea of replacing the banknote.

It depends on the features in the new banknotes whether they can be counterfeited or not and actually talking about counterfeit money I think this is only a temporary pause, not a stop because the circulation of things like this will definitely happen again and again even though the banknotes are always updated.
I think this is just an addition to the budget by creating something new which of course uses more and more because the impact is not too significant, especially when there is inflation at some point.

[goaldigger]

Redesign of a currency note has zero net impact on the economy. It will definitely carry a likeability factor but that's it! Nothing else will be achieved through the redesigning. It's not an e-commerce website where redesign will increase the trust and sales.

Nigerian government is probably taking advise from non-qualified people rather than an economist. Otherwise no country would have taken this path during the time of high inflation and global economic meltdown. Too hilarious!

Most probably they are changing it to minimize the cost and make it more efficient for the years to come so that could only the effect that you can get from changing the design of their bank notes, it will not affect their economy that much. In my country, almost every new president they change the design of our notes, I don’t know why but its slowly becoming the trend, they are wasting a lot of time for this while our economy is experiencing a lot of problem, well what you can expect from the corrupt government.

[Pokapoka124]

Nigeria reportedly spent N218 billion to redesign the naira notes. I think they should have used that money for something more productive, or a least pay the debts they owe China. President Muhammad Buhari has spoken publicly about the reason why his administration decided it was time to spend so much money to redesign the naira despite the recession, fall of the naira, floods and increased poverty sweeping the nation. This is what President Muhammad Buhari had to say “ A cycle of banknote redesign is generally aimed at achieving specific objectives, including but not limited to: improving security of banknotes. It is also aimed at mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the overall cost of currency management.“
I hope this answers your questions. The intention was not to strengthen the economy but to eliminate the possibility of counterfeiting.

[Die_empty]

A cycle of banknote redesign is generally aimed at achieving specific objectives, including but not limited to: improving security of banknotes. It is also aimed at mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the overall cost of currency management.“
I hope this answers your questions. The intention was not to strengthen the economy but to eliminate the possibility of counterfeiting.

Apart from preserving the currency as a national symbol other reason for the redesigning of the Nigerian currency can impact the economy positively. When fake currency circulates in an economy it affects the activities of both retailers and wholesaler because most of them might loose money when they are paid with counterfeits. It could also lead to the rejection of the countries currencies in the international market because of the fear of it being fake. The government also raised the concern of more money being in the hands of individuals more than what the bank has which also have some economic effect.

There is also a report that the new Naira note is more durable than the former one which would help the government save more money from the cost of reprinting the currency periodically. Nigeria has been challenged recently by an increase in kidnapping for ransom. This criminal activities have led to poor economic activities in most parts of Nigeria. It has scared investors and even led to the closure of many businesses. The CBN stated that this new currency has some security features that would make it difficult for it to be used for ransom payment.

There is nothing bad in redesigning the Naira since it is long overdo but Nigerians are concerned about the timing of this policy. Nigeria as well as other countries is going through so much economic challenges that has made her to depend on borrowing to finance even recurrent expenditure. People are suggesting that this policy should be dropped until when the economy recovers.      

[glendall]

actually changing the design of money has another purpose besides being an update so it doesn't look outdated, sometimes when updating money there will be a new method so that money is more difficult for irresponsible people to fake, with a level of difficulty that has rotation and the value of the original money will be more valuable if the money fake is no longer on the market,
counterfeit money always makes the economy go down and the exchange rate of money itself becomes incompatible with its use value

[knowngunman]

Wow! I'm actually impressed with the responses I received from you guys. Thou, I can see some people's opinions are derived out of sentiment and bias. I don't think locking the thread is actually necessary, it differ a bit from the other thread.

[Dunamisx]

Changing the bank notes may not have any tangible impact with increasing the value of the currencies involved but it a way to go far in tackling with corruption, this are what others have been using as well to shame those that have escaped the nest of the enforcement agencies for money laundering and other criminal acts offense, to an extent this is a target aimed at the political powers, those who have stored alot of those denominations in higher volume in the comfort of their homes to be used for an election propaganda while others are suffering from poverty and lack of good access to life, they wanted to put an end to those involved in such acts and renders their money into waste after the due date, ofcourse they cant take huge amount of money to the banks because their bubble will got burst and they needed to exchange them i to the nee notes before the due date, this could only be achieved if they central bank itself isn't corrupt to doing somethings behind.