SOLUTIONS FOR CURRENCY REDESIGN AND DISRUPTION:
Dave Ikiedei Asei
07/02/2023
WHAT IS CURRENCY REDESIGN?
Currency redesign refers to the process of changing the design, images or other features of paper banknotes and coins. The main purpose of currency redesign is to incorporate new security features to prevent counterfeiting and to make the currency more visually appealing.
SOME ADVANTAGES OF CURRENCY REDESIGN:
IMPROVED SECURITY:
New security features, such as watermarks, holograms, and special inks, make it more difficult for counterfeiters to produce fake currency.
INCREASED EFFICIENCY:
Updating the design of currency makes it easier for automated machines, such as ATMs, to quickly and accurately recognize and accept the bills.
INCREASED ACCEPTANCE:
A new and visually appealing design can increase the acceptance of a currency both domestically and internationally.
HISTORICAL RECOGNITION:
A currency redesign can showcase important historical events, figures, or cultural landmarks, which helps promote national heritage and cultural identity.
ECONOMIC BENEFITS:
A currency redesign can stimulate the economy by creating jobs for designers, printers, and security experts, as well as driving demand for new currency among the public.
COST SAVINGS
The incorporation of new security features can reduce the cost of counterfeiting investigations and increase the overall efficiency of the financial system.
IMPROVED DURABILITY:
A redesign may include the use of new materials, such as polymer, which are more durable and long-lasting than traditional paper notes.
EASE OF USE:
A redesign can make it easier for individuals with visual impairments to distinguish different denominations of currency, as well as making it easier for people to use the currency in general.
ANTI-COUNTERFEIT MEASURES:
Currency redesign can include the implementation of anti-counterfeit measures, such as microprinting, embossing, and latent images, to further prevent counterfeiting.
PUBLIC AWARENESS:
A currency redesign can raise public awareness of the importance of monetary stability and the role of the central bank in maintaining it. This can also help promote the image and credibility of the central bank and the country as a whole
BEST WAYS TO REDESIGN AND DISTRIBUTION
there is no single "best" way to do this, it would depend on a number of factors such as the purpose of the redesign, the current state of the economy, the political climate, etc. However, some general steps that could be taken in such a scenario might include:
Conducting a thorough analysis of the existing currency system to identify strengths and weaknesses.
Engaging with stakeholders, including the public, financial institutions, and government agencies, to gather input and feedback.
Developing a clear plan for the redesign, taking into account the goals and requirements of all stakeholders.
Ensuring that the new currency is secure and can be easily distributed to the public.
Providing clear guidance and support to financial institutions and businesses to help them transition to the new currency.
Careful implementation of the new currency to minimize disruption to the economy.
Note that the success of a currency redesign and distribution will depend on many factors and can be challenging, so it is important to approach it with caution and with the assistance of experienced professionals.
Conducting public education and awareness campaigns to familiarize people with the new currency and how to use it.
Establishing a monitoring and evaluation system to track the effectiveness of the redesign and identify areas for improvement.
Providing support for individuals and businesses to help them adapt to the new currency, including technical support for new payment systems and training on new security features.
Regularly reviewing and updating the currency system as needed to ensure its continued effectiveness and relevance.
Building strong partnerships with international organizations, such as central banks and international financial institutions, to ensure that the new currency is recognized and supported globally.
Maintaining a strong focus on transparency, accountability, and security throughout the redesign and distribution process to protect the integrity of the currency and build public trust.
THE CURRENT STATE OF NIGERIA:
Nigeria is facing a number of challenges, including inflation, devaluation of the currency, and a shortage of foreign exchange. The government and central bank have taken a number of steps to address these challenges, including implementing monetary policy measures, increasing foreign exchange supply, and promoting economic diversification.
However, these measures have had limited success so far and the economy continues to face significant headwinds. It's important for the government and central bank to continue to work together and explore innovative solutions to address these challenges and ensure long-term economic stability in Nigeria
SHORTAGE OF THE NEW NAIRA NOTES:
Nigeria has just redesigned the following Naira denominations, the N200, N500, and N1000 notes. But residents in all parts of the country are facing severe financial crises as a result of the inability of commercial banks banks to dispense cash to customers as needed.
There is allegations that many of the commercial banks have refused to pay their customers who want to withdraw cash . Even in the ATM machines, there are limited cash to be dispensed, and with the cashless policy of pegging maximum daily withdrawal to twenty thousand Naira only (N20,000.00), yet thousands of customers queue to withdraw from the ATMs but over 90% of the customers end up going back home without withdrawing any cash.
Also those who go inside the banking halls face similar fate as some people allegedly give some tips to bank officials to get paid, while there are reports that some persons sell the new Naira notes in the black market for a Commission very high but due to the fact that there is hunger, the helpless citizens pay the high interest and buy from the black market.
THE NEGATIVE EFFECTS OF HOARDING CASH:
MISSED INVESTMENT OPPORTUNITIES:
Holding back large amounts of cash may result in missing out on potential investment opportunities that could have generated higher returns.
INFLATION EROSION:
The economic theory that says when cash is scarce, prices would come Down, but in Nigeria as a case study the reverse is the case. Even when the banks are depriving the citizens to collect their cash p, prices of goods and services do not obey the laws of demand and supply. This is so alarming .
This means that the money that the banks have deprived their customers can lose its purchasing power over time due to inflation. This means that the value of the cash you are hoarding decreases as the cost of goods and services rise.
OPPORTUNITY COST:
Keeping money in cash form means giving up the opportunity to earn a return on investment, which could have otherwise been used to grow wealth over time.
LACK OF LIQUIDITY:
In times of financial hardship or emergencies, having too much money tied up in cash may result in a lack of liquidity and make it difficult to access the funds when needed.
REDUCED PURCHASING POWER:
As the cost of goods and services increases, the value of cash decreases, reducing purchasing power and overall financial security.
The country is also going to the polls on the 25th of February, 2023 for the presidential and National Assembly elections and the governorship and state Assembly elections on the 11th of March, 2023.
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