Cardoso blames digital payments, weak purchasing power for scarcity of N100, N200 notes

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has attributed the scarcity of lower-denomination naira notes, particularly N100 and N200 bills, to the growing adoption of digital payment platforms and declining purchasing power.

Cardoso spoke on Tuesday in Abuja after the Monetary Policy Committee (MPC) meeting.

The CBN governor, however, clarified that the apparent scarcity of the notes does not mean they have been withdrawn from circulation or ceased to be legal tender.

He urged Nigerians to continue accepting the N100 and N200 notes, stressing that the apex bank had not withdrawn any denomination from circulation.

“Yes, they remain legal tender. Unless the central bank states otherwise, Nigerians should assume that all existing denominations remain legal tender,” Cardoso said.

He explained that the reduced availability of the notes was largely driven by changes in demand and supply as Nigeria’s financial system increasingly shifts towards digital transactions.

“As more people adopt digital payment channels, the demand for coins and lower-denomination notes naturally declines. If there is less demand for them, there is less need to print and circulate them in large quantities,” he said.

Cardoso also noted that the depreciation of the naira had eroded the purchasing power of lower-value notes, contributing to their declining use.

“Of course, we must also acknowledge that currency devaluation has affected the purchasing power of lower-value notes. That is a reality,” he said.

On inflation, the CBN governor reaffirmed the bank’s commitment to bringing inflation down to single digits, despite external shocks that have slowed the pace of disinflation.

He said the country had recorded 11 consecutive months of disinflation and had initially been on course to achieve its desired inflation path by early 2027.

“Unfortunately, we have experienced external shocks that were not anticipated and have lasted much longer than anyone expected,” he said.

“As for our single-digit inflation target, we remain committed to it.”

Addressing the International Monetary Fund’s recent assessment that the naira is undervalued, with a fair value estimated at about N1,150 to the dollar, Cardoso said the exchange rate should be determined by market forces rather than a predetermined target.

“Our position remains the same. We will continue to ensure that Nigeria has a foreign exchange market that is transparent, liquid and based on a willing-buyer, willing-seller framework,” he said.

According to him, the eventual exchange rate will depend on market fundamentals, including oil exports, foreign direct investment, domestic productivity and import substitution.

Cardoso said the CBN was satisfied with the current state of the foreign exchange market, describing it as functional, transparent and open.

He added that market turnover had, on some days, exceeded $1 billion, which he said reflected growing confidence in the foreign exchange market.