Cardoso blames digital payments for ₦100, ₦200 note scarcity

The Central Bank of Nigeria (CBN) says the current scarcity of lower-denomination naira notes is being driven by the growing use of digital payment channels and changing demand for cash.

Olayemi Cardoso, governor of the CBN, spoke on Tuesday after the monetary policy committee (MPC) meeting in Abuja.

He said the scarcity of the notes does not mean they have lost their status as legal tender.

Cardoso urged Nigerians to continue accepting the ₦100 and ₦200 notes, stressing that the apex bank has not withdrawn any denomination from circulation.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.

“As to why there appear to be fewer of these notes in circulation, it is largely a matter of demand and supply. The financial ecosystem is evolving in the direction we want it to, with greater financial inclusion and increased digitisation.

“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 the declining purchasing power of the lower-value notes has also contributed to their reduced circulation.

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

“More importantly, however, as financial inclusion expands and digital payments become part of everyday life, fewer people will rely on these denominations.”

Speaking on inflation, the CBN governor said the apex bank remains committed to achieving single-digit inflation despite external challenges slowing the pace of disinflation.

Reacting to the International Monetary Fund’s (IMF) assessment that the naira is undervalued, with a fair value of about ₦1,150 to the dollar, Cardoso maintained that the exchange rate should be determined by market forces rather than a fixed target.

“Our position remains the same,” he said.

“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.

“Where the exchange rate eventually settles depends on market fundamentals. It is influenced by factors such as oil exports, foreign direct investment, domestic productivity and import substitution.”

He also said the CBN is satisfied with the current state of the foreign exchange market, noting that Nigeria now “have a functional, transparent and open market,” adding that on some days, market turnover exceeds $1 billion, reflecting growing confidence.