To reduce inflation, terrorism, and vote-buying as the nation gears up for a crucial general election, the CBN adopted new monetary policies to restructure Nigeria’s currency and restrict the amount of cash in circulation in the fourth quarter of 2022. The adopted policy required the redesign of the larger denomination currency notes (N200, N500, and N1000) and provided Nigerians with a three-month window to return their old notes in what would have amounted to a swap if not for the daily withdrawal restrictions that went along with it.
It first set a deadline on January 31 for the return of the affected notes; but, under lawsuits and criticism from politicians and other Nigerians who were unable to access enough currency for transactions, particularly at the informal level, the deadline was later extended to February 10.
The Central Bank of Nigeria collected N1.6 trillion in January alone thanks to its aggressive policy of phasing out old N200, N500, and N1000 notes and releasing just a small number of new ones into circulation.
According to CBN statistics, the continued implementation caused the currency in circulation to drop as low as N1. 39 trillion in January 2023, marking its lowest point since December 2015.