Central Bank of Nigeria to limit cash withdrawals

[romero121]

When a country focus on promoting it's CBDC, it is a must to look for the ways with which it can be executed. Here this is possible through limiting the cash withdrawal and making the people focus on using CBDC. Nigeria being the leader to the cryptomarket of the African continent the usage of cryptocurrency is felt high amidst the legality and regulatory measures. To keep things in control this initiative have been taken and it is a flaw.

[Davidvictorson]

When a country focus on promoting it's CBDC, it is a must to look for the ways with which it can be executed. Here this is possible through limiting the cash withdrawal and making the people focus on using CBDC. Nigeria being the leader to the cryptomarket of the African continent the usage of cryptocurrency is felt high amidst the legality and regulatory measures. To keep things in control this initiative have been taken and it is a flaw.

Well most Nigerians I know will never use the CBDC. It is just too unattractive. Transaction fees are too high and it is just absolutely ridiculous. Young Nigerians already zero confidence n government since they place a ban on bitcoin transaction and implemented other economic and financial policies that were unfavorable. In my honest opinion, for the CBDC to work, the government must first lift the ban on bitcoin transactions and allow bitcoin to co-exist with their CBDC after they have fixed their transaction fee, only then will young Nigerians even consider it.

[Woodie]

Not sure if online channels are affected by these OTC cash withdrawal limits, but am guessing the intention could be to try to lower the high demand for goods and services which could be pushing prices up and contributing to the countries raising inflation rate as supply isn't matching this demand .

This time it will be hard for Nigerians to fine their way to abusing the new policy, most especially now that the only option open to both pos and individual bank users are subject to processing fees of up to 10% for transactions above the 20k limit.

The motive of the high processing fees could be aimed at discouraging high spending, but unfortunately people will always find their way to get what they want especially politicians , and with some kickbacks here and their these limits are really not for everyone.

[_BlackStar]

I don't know what the worst consequences of adjusting withdrawal limits will be for the Central Bank of Nigeria. Obviously I'd find the withdrawal limit adjustment too low for most people, but something positive can also be thought of.

I actually don't like about how they set those withdrawal limits. There's going to be a lot more trouble than hoping for profits, and it's likely that people will lose interest in stashing lots of money in their bank accounts in the near future. I don't know what benefit they're having in mind, but I don't think most people would really expect that.

[Iroh]

If you think government policy is unreasonable, do you have a better solution? Or do you just sit there and do nothing and criticize the government? It's funny when many people criticize the government, while the government is the ultimate authority, and others are just commoners who go online to slander the government and do nothing for the country.

Government make unreasonable and somewhat stupid policies all the time to favor some certain few individuals. I think I’m actually doing something when criticizing the government on policies I think aren’t beneficial to the general populace.
Elections which require the citizens to vote are held that put these people in government. If they’re not elected, they won’t have a position in government. Who then has the ultimate authority? I’d say it’s the voter that elects whoever in government. And it’s the commoners who has the ultimate power. The power to vote.

With your mindset, I bet you’re the type to be sucking up to anyone that has power and money. Defending the indefensible and ignorantly giving your rights away for peanuts.

[karabiber]

The full impact of this new policy on the economy and her citizens will be felt not next month but in 3 months that is when it can fully be accessed. I get it there are a lot of downsides to this but let's also consider the upside which has always been reducing corruption, a functional cashless economy as most Nigerians would look towards doing cashless transactions in addition the value of the naira would increase.

I agree that the effect of the new decisions will be felt for 3 months. The impact of economic decisions is often not immediate. Of course, the decision has its advantages and disadvantages. But i think its biggest advantage will be preventing informality. The low amount of cash in the system may slow down the economy. In order for the economy to remain in balance there must be sufficient cash in the country. It is desirable that the liquidity ratio in the country is at the optimum level according to the financial structure of each economy. In one way, the value of the Nigerian Naira may increase. It looks like CBN has set limits on cash withdrawals and transactions to stabilize the value of the National currency.

[AicecreaME]

Even without the push for CBDC central banks around the world have been limiting the amount of cash to withdraw. Only this time they are fast-tracking the use of CBDC in the country where people are also aware of BTC.

It's been a failure so there is the need to push CBDC harder to make it. If they are to fight this, it's best for people to also not deposit cash to keep the cash circulating.

I agree.

Since banks and government cannot find a way on how to tax cryptocurrency, it seems that this CBDC thing is the only way on how they can control the fiat circulation in the internet (digital payments) and they can easily track people who are making a lot of money that they didn't know which of course they are going to tax more. This CBDC thing to me smells fishy, I don't trust the banks.

[Fatunad]

Even without the push for CBDC central banks around the world have been limiting the amount of cash to withdraw. Only this time they are fast-tracking the use of CBDC in the country where people are also aware of BTC.

It's been a failure so there is the need to push CBDC harder to make it. If they are to fight this, it's best for people to also not deposit cash to keep the cash circulating.

I agree.

Since banks and government cannot find a way on how to tax cryptocurrency, it seems that this CBDC thing is the only way on how they can control the fiat circulation in the internet (digital payments) and they can easily track people who are making a lot of money that they didn't know which of course they are going to tax more. This CBDC thing to me smells fishy, I don't trust the banks.

They would be touching up something centralized which is CBDC's which it isnt really that surprising or shocking anymore.Speaking about limit cash withdrawals then as a citizen then there's no thing you can do
since they do have the full control and rights on how things should really be handled out. When you are dealing with centralized things then they do always have the power, whether they would be
locking up some funds or would be allowing through and it would really depends into their own discretion. Not all would really be that living on a place where you do have
that complete freedom when it comes to your own funds.

[noorman0]

-snip-
First, lets look at it from the businessman perspective. Most market women go to market with cash. SMEs mainly do cash and even the business owners that are technologically advanced have customers that are not. There are lots of businesses that involves the movement of cash daily. In as much as I do not like people moving around with cash, this would really hinder their business. There is a high level of illiteracy in Nigeria, hence high poverty rate. Most of these people don't even know how to carry out an online transaction. These people need to first be brought out ignorance an illiteracy so the can at least find a way to come out of poverty. This should be the goal. And what better way to this than informing and educating them.

Do you think the government will slowly kill SME businesses with these restrictions?
I think illiterate customers will have little to do with "tech" services because of their incompetence. Assuming these illiterate people have income in cash from withdrawals by the company where they work then that is enough to maintain cash circulation among the lower classes.

This limit is not completely limiting, according to the article there is a 5-10% fee for withdrawing more than the conditions and that I don't think is a problem for the company.

[Gozie51]

[quote author=Alpha Marine

This limit is not completely limiting, according to the article there is a 5-10% fee for withdrawing more than the conditions and that I don't think is a problem for the company.

The limit is going to have a challenge on the Nigerian masses because it is barely limiting individuals from having 50% of cash to run the home. Nigeria is still predominantly a country not urbanized like the technological advanced countries so it is going to be difficult for the market women that do day to day selling a problem. The older businesses that are not in the line of internet banking will also have big challenge. The 5% charge for wanting to overburden the rules is still high.

[Lubang Bawah]

Withdrawal restrictions are usually carried out by the central bank to control the value of fiat, as we know that most fiat will continue to decline, especially when the supply or stock of goods decreases so that the price is out of control, when restrictions on withdrawals, people will limit buying so that it can automatically prevent price increases or inflation.

[ancafe]

The central bank of Nigeria is changing up the entire system to try to boost the economy and the dwindling naira.
I personally do not fancy the idea of limiting how much cash withdrawals one can make within certain periods of time and putting a low cap on that.

This restriction will have quite an impact on the industrial, agricultural and SME sectors across Nigeria, the idea of limiting the amount of cash withdrawals is not a solution to improve the economy of the people there, as they say they will charge additional withdrawal fees in the process of 5% and 10% respectively . This idea is too forced in my opinion, because in general it does not benefit any party other than the local government.

This would adversely affect SMEs around the country and while it would push more people to exchange digitally through cashless means, it would have lots of negative sides

Not all sectors have the resources to make transactions using digital money, so the idea of limiting the amount of cash withdrawals will hamper the process of marketing SME products and the general distribution of other companies. Although the push to make exchanges through digital cashless means can be carried out independently, the problem is whether Nigeria has the current supporting resources.

How the policy would impact the economy and more importantly the citizens would be seen next month.

The impact will be seen after the regulations come into force, it is possible that the reaction to the results will be an evaluation of the policy by the government there.

[Majestic-milf]

The idea to limit cash withdrawals in a day was actually preposterous in my opinion it's more like putting a limit to business transactions. But it's a good thing they've finally considered putting an increase to weekly cash withdrawals.

 As against the initial $225 for individual withdrawals, it has been increased to $1,125 while for corporate entities, the bar was raised from $1,100 to $11,000.
 But if such changes can be made after the outcry of the public, then what's the point of putting a limit?

[odunybiz]

Although this may not go well with most Nigerians but I see it as a very nice policy as this will help to make crypto currency more known to people in the long run.

[MarjorieZimmermanGinger]

The central bank of Nigeria is changing up the entire system to try to boost the economy and the dwindling naira.
I personally do not fancy the idea of limiting how much cash withdrawals one can make within certain periods of time and putting a low cap on that.
This would adversely affect SMEs around the country and while it would push more people to exchange digitally through cashless means, it would have lots of negative sides

The idea of limiting cash withdrawals will have quite a big impact on companies and SMEs there, but it seems the cash withdrawal restrictions have been grounded as the Central Bank of Nigeria plans to withdraw and replace their government's redesigned Naira banknotes, although the source is unconfirmed. However I think the restrictions put in place by them will have an impact on the stability of the Nigerian economy once the restrictions come into effect.

The resources owned by Nigeria have not maximally accommodated digital exchanges through non-cash means, therefore the negative side will always be a problem for the decisions taken.

How the policy would impact the economy and more importantly the citizens would be seen next month.

Every policy taken will definitely have an impact, but the most important thing is don't force it if you don't have the resources and other support, it looks like Nigeria is trying to make a fast process without cash. This country doesn't have strong enough resources and available technology, so it will cause confusion among the people there.

[Swordsoffreedom]

Although this may not go well with most Nigerians but I see it as a very nice policy as this will help to make crypto currency more known to people in the long run.

This is a very good point, I think too. This is a good thing for crypto because this policy will cause people to lose faith in fiat even more. People will be looking for a better alternative, and the only option that people can find is a cryptocurrency and more specifically bitcoin. A currency, the asset, is not controlled by anyone, so withdrawal will become extremely easy. 

I don't know what the real goal of the government is, but it seems that the Nigerian government is very stuck in controlling its economy, they are constantly introducing changes, but it has not worked.

[odunybiz]

I don't know what the real goal of the government is,

This cash policy is aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including:

👉👉High cost of cash: There is a high cost of cash along the value chain - from the CBN & the banks, to corporations and traders; everyone bears the high costs associated with volume cash handling.

👉👉High risk of using cash: Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents.

👉👉High subsidy: CBN analysis showed that only 10percent of daily banking transactions are above 150k, but the 10percent account for majority of the high value transactions. This suggests that the entire banking population subsidizes the costs that the tiny minority 10percent incur in terms of high cash usage.

👉👉Informal Economy: High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.

👉👉Inefficiency & Corruption: High cash usage enables corruption, leakages and money laundering, amongst other cash-related fraudulent activities.

Reference: https://www.cbn.gov.ng/cashless/

[freedomgo]

Nigerian government is speeding the process of going cashless. The government might've made proper research and study, but for the common people it looks like something taking place in a much faster phase. Proper implementation reach the people in the right way than just trying to do what the government have scheduled.

Recently Nigerian government have taxed the cryptocurrency and now the plan to lower the fiat into circulation seems like a better way to go cashless and improve its own CBDC. Nigeria doing things in the right way and supporting cryptocurrencies will help them grow the economy as the country have got good number of cryptocurrency users.

The withrawal limit for fiat seems like the government wants to slow down on producing paper money and stick to generating more CBDCs. Although this can be a good preparation to go cashless in the years to follow, but it could also trigger negative impressions from the citizens. In fact, this will also encourage crypto enthusiasts to finally shift to cryptocurrencies than trusting CBDCs as they are still government produced and controlled, same with fiat.

[EdenHazard]

The idea to limit cash withdrawals in a day was actually preposterous in my opinion it's more like putting a limit to business transactions. But it's a good thing they've finally considered putting an increase to weekly cash withdrawals.

 As against the initial $225 for individual withdrawals, it has been increased to $1,125 while for corporate entities, the bar was raised from $1,100 to $11,000.
 But if such changes can be made after the outcry of the public, then what's the point of putting a limit?

They are indeed pushing the people to go for digital economy forcefully as many experts says that many developing country try their luck to have a boosted economic through what so called 'crypto hype' and catch what they have left from those richest country.

Not sure if this way might work ... but yeah worth to try and let's see it.