CBN worries over increasing prevalence of currency counterfeiting

Sanusi Lamido Sanusi, governor of, the Central Bank of Nigeria (CBN), has expressed concern over the increasing prevalence of currency counterfeiting in the country and Africa which he said is becoming even easier to accomplish due to advances in technology.

Sanusi said currency counterfeiting has become a major challenge for the apex banks on the continent in performing one of their critical functions of currency management.

According to him, when unchecked and allowed to flourish in an economy, currency counterfeiting undermines the integrity of the domestic economy; creates economic distortions; and renders the tools of economic management ineffective, if not properly managed.

Sanusi was speaking in Abuja at the regional workshop on Banknote and Currency Management in Central Banks organised by the West African Institute for Financial and Economic Management (WAIFEM) in collaboration with Currency Research USA Corp.

The main aim of the workshop is to explore the key challenges central banks face in currency management in the West African sub-region and how these could be tackled.

In his opening speech, Sanusi noted that in order to overcome this malady, appropriate enlightenment on the evil of counterfeiting needs to be provided to the people while adequate anti-counterfeiting laws should be enacted to check perpetrators of the act.

He further observed the need for effective collaboration between central banks and other international agencies involved in the fight against counterfeiting.

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“Central banks need to safeguard the value of the currency through various measures such as initiating policies relating to the issue and redemption of currency, initiatives to prevent and minimise money laundering and counterfeiting, and adequately meeting the demand for money by the public. When confidence in the currency is strong, this fosters monetary and financial stability which is a precondition for achieving sustainable economic growth”, he stated.

The governor told the participants that in order to tackle the challenge and stay ahead of the counterfeiters, the CBN has introduced a new policy on cash-less with a view to reducing cash transactions in the economy which was being test-run in Lagos State since January, 2012, but has been introduced in five more states, including Rivers, Kano, Anambra, Ogun, Abia as well as the Federal Capital Territory (FCT) at the beginning of June.

He particularly said that for the currency managers, note design presents a series of interlocking challenges as new designs must win public acceptance, incorporate requisite security features and meet durability and machine processing standards. Fitness standards for currency in circulation must be set and monitored whether currency sorting is carried out in-house or outsourced, he also observed.

“I need not stress that effective currency management depends on excellent information and insightful analysis. Efficient and effective currency management commences with a strategic analysis of the currency life-cycle. However, strategic management of currency is impossible without accurate forecasts of the demand for banknotes”, he told the participants.

Corroborating Sanusi’s views in his welcome speech, Akpan Ekpo, director general, WAIFEM, noted currency management as one of the critical functions in central banks’ operations and that the integrity of a currency and its efficient supply are clear indicators of a well-functioning central bank.