Cardoso Explains Scarcity of N100, N200 Notes, Blames Digital Payments, Weak Purchasing Power

Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has attributed the apparent scarcity of N100 and N200 banknotes to changing payment habits, particularly the growing use of digital financial services, as well as the erosion of the purchasing power of lower-denomination naira notes.

Cardoso, who spoke on Tuesday after the meeting of the CBN Monetary Policy Committee (MPC) in Abuja, dismissed concerns that the affected denominations had been withdrawn from circulation.

The governor stressed that the N100 and N200 notes remain legal tender and should continue to be accepted for transactions across the country.

He said the CBN had not announced the withdrawal of any existing naira denomination, urging Nigerians to continue accepting the lower-value notes.

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

His clarification comes amid growing public concerns over the availability of lower-denomination cash, with some Nigerians questioning whether the reduced presence of N100 and N200 notes in circulation signals a deliberate move by the apex bank to phase them out.

Cardoso, however, said the situation was primarily a reflection of demand and supply dynamics within an increasingly digitised financial system.

According to the CBN governor, the rapid expansion of financial inclusion and the increasing adoption of electronic payment channels have changed the way Nigerians conduct everyday transactions.

As more people rely on bank transfers, mobile banking, point-of-sale terminals and other digital payment platforms, demand for physical cash, particularly lower denominations has naturally declined, he explained.

Cardoso said the changing behaviour was consistent with the CBN's broader financial inclusion objectives and the transition towards a more digitised payments ecosystem.

“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,” he said.

The governor also pointed to the decline in the purchasing power of the naira as another factor affecting the usefulness and demand for smaller denominations.

According to him, the depreciation of the currency over time has reduced what consumers can purchase with N100 or N200, making the notes less significant in many everyday transactions than they were in the past.

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

He added that the continued expansion of digital payments would likely further reduce Nigerians reliance on physical cash.

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

On inflation, Cardoso reaffirmed the CBN's commitment to restoring price stability and eventually bringing inflation into single digits.

He acknowledged that progress towards the target had been affected by external economic shocks, but maintained that the apex bank remained focused on its disinflation strategy.

The governor recalled that Nigeria had previously recorded 11 consecutive months of disinflation, saying the CBN had expected the trend to continue towards its inflation objectives.

“It is important to remember where we are coming from. We recorded 11 consecutive months of disinflation and, from every indication, we expected that by early 2027 we would be where we wanted to be in terms of inflation, with a path towards single-digit inflation,” he said.

Cardoso, however, said unexpected external developments had disrupted the pace of progress.

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

Despite the challenges, he insisted that the CBN had not abandoned its long-term inflation objective.

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

The CBN governor also addressed the debate over the value of the naira following recent comments by the International Monetary Fund (IMF) that the Nigerian currency remained undervalued.

Cardoso maintained that the exchange rate should be determined by market forces and economic fundamentals rather than by administrative targets or efforts to artificially support the currency.

He said the CBN would continue to pursue a foreign exchange regime based on transparency, liquidity and a willing-buyer, willing-seller framework.

“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 Cardoso, the eventual value of the naira would continue to reflect underlying economic conditions, including the country's oil and non-oil exports, foreign direct investment, domestic productivity and efforts to reduce dependence on imports.

“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 added.

Cardoso said the apex bank was satisfied with developments in the foreign exchange market, pointing to improved liquidity and increased confidence among market participants.

He noted that Nigeria now operates what he described as a functional, transparent and open foreign exchange market, with daily turnover exceeding $1 billion on some trading days.

The governor's comments underline the CBN's position that the naira's long-term stability will depend not on administrative intervention alone but on stronger economic fundamentals, increased foreign exchange supply and deeper participation in the formal market.

Meanwhile, his assurance that all existing denominations remain legal tender is expected to ease concerns among Nigerians who have questioned the availability of lower-value notes and whether their reduced circulation represents a change in the country's currency policy.