Changing a currency: the demonetisation in Nigeria

In November, the governor of the Central Bank of Nigeria (CBN) unveiled plans to the public to replace the ₦‎200, ₦‎500 and ₦‎1000 banknotes. This happened after the President had approved the policy and when asked for reasons for the change, the President explained: ‘‘There was an urgent need to take control of currency in circulation and to address the hoarding of Naira banknotes outside the banking system, the shortage of clean and fit banknotes in circulation, and the increase in counterfeiting of high-denomination Naira banknotes. On this basis, I approved the redesign of the ₦‎200, ₦‎500, and ₦‎1000 banknotes.” Nigeria’s central bank had lost track of ₦2.7 trillion of the ₦3.2 trillion of notes in circulation because Nigerians had been hoarding cash. This has meant Nigerians have been by-passing banks, leading to a thriving informal economy estimated to be as much as 57.7% of Nigeria’s GDP. 

To achieve this, the government intended to phase out the old currencies by January 31st,…