Currency Restructuring Exercise in Nigeria: overview and Potential Implications

Abstract

This paper seeks to examine the potential policy implications of the new currency restructuring exercise (CURE) on the Nigerian economy. The specific objective of this study is to review the composition, rationale and proposed benefits of currency restructuring policy of CBN. The study overviewed the key rationale of the new Project CURE, which was designed to reduce cost of printing small currency notes, to minimize dollarization of the Nigerian economy and impacted on the exchange rate policy of CBN that has not been effective particularly between 1998 and 2011. The findings of the study show that the key potential policy implications of the new currency restructuring exercise are to raise Currency in Circulation, Money Supply and consequently inflation rate. It also has the potential of creating foreign currency liquidity risk. The study recommends that there should be greater focus on stabilization of Naira and there should be harmonization of fiscal and monetary policies. The study concludes on a final note that there are more pressing issues to be addressed currently in Nigeria.