Banks risk run on as citizens await Supreme Court’s intervention | The Guardian Nigeria News - Nigeria and World News

• Nigeria may lose $18m in GDP monthly to naira squeeze – Rewane• CBN needs to pump more than it mopped to avert major financial crisis, Adonri advises• Ogun files application to join Kaduna, Zamfara, Kogi suit against FG

Emefiele insisted that the bank’s position remains unchanged despite a Supreme Court order restraining the apex bank from phasing out the new notes as planned, pending the hearing of a lawsuit brought by three Northern states challenging the currency redesign. He disclosed that the N2.7 trillion outside the banking system and in vaults of individuals posed a threat to the Nigerian economy. He further argued that the amount that ought to be in circulation should not be more than N700 billion, as a result, the N2.7 trillion was a huge threat to managing the country’s monetary policies.

Speaking on gains recorded so far from the naira redesign and its corresponding policy add-ons, Emefiele noted: “Today, the limited circulation of the new naira notes has forced the hand of speculators and we are beginning to witness some stability. The initial pressure is projected to further moderate as the implementation of this policy takes off and a wider understanding of the system is achieved.

Rewane also attributed the decline in the GDP growth to reduction in velocity of money in circulation. “Trade is settled mainly in cash and PoS, although 70 per cent of trading transactions are settled by cash. Behind the scenes, top bankers and other stakeholders in the community are working on getting the buy-in of the Central Bank of Nigeria to roll out a campaign to raise the confidence level.

Buhari had accused the banks of sabotaging the programme. On different occasions, officials of the CBN also raised the alarm that the commercial banks were hoarding the new banknotes, thereby halting the speed of circulation. A customer manager said it is the most difficult time to be a banker, disclosing that she had not witnessed the level of hate speeches against bank officials in her 13 years working in different banks.

“If there is a bank run, the financial system will be in trouble. Sadly, we are not doing anytime to prevent this. The Supreme Court directive should have been followed with an action in the form of re-circulating the old notes. But that has not happened; there has not been formal communication with Nigerians to continue to use the old notes or otherwise. This has created confusion with some businesses rejecting the old notes,” Owoh lamented.

Source: News Formal (newsformal.com)

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