BY AMAKA ABAYOMI

The Central Bank of Nigeria, CBN, has said the recent cash withdrawal limit policy will enhance the efficacy of the monetary policy operations and economic stabilisation measures as economic transactions would be done through cheques and electronic payment options.

In a circular on its website, the CBN said the use of cheques and e-payment options for transactions will result in a higher proportion of money in circulation being readily captured within the banking system.

“By implication, the CBN’s stabilisation measures – either tightening or expansionary monetary policies to tackle inflation – will become more effective.”

In collaboration with the Bankers’ Committee, the CBN aims to achieve an environment where a higher and increasing proportion of transactions are carried out through cheques and e-payments.

“In line with global trend, this policy will help in ensuring the effectiveness of stabilisation measures, keep the currency in circulation clean and durable, and reduce the cost of cash management.”

Pointing out that the policy will help check the high rate of organised crimes such as armed robbery and money laundering, the CBN said such criminal activities can be easily traced and tracked in an environment that makes extensive and predominant use of cheques and e-payments.

The CBN pointed out that the policy would not have any negative effect on the economy nor banking public as data from Nigerian banks show that only about 10 per cent of cash withdrawals from banks are of more than N100,000.

“This implies that the new policy will only affect 10per cent of banking customers who also account for over 75 per cent of all banking transactions, thus accounting for the lion share of the cost of cash management.