CBN blames digital payments for disappearing N100, N200 notes, rules out withdrawal

‌Nigeria’s lower-denomination naira notes have not disappeared from circulation, but changing payment habits and the rapid shift towards digital transactions are reducing their availability, the Central Bank of Nigeria (CBN) has said.

 

The apex bank moved to calm concerns over the scarcity of N100 and N200 notes, insisting that the denominations remain legal tender and have not been withdrawn.  Olayemi Cardoso, CBN Governor  said the reduced presence of smaller notes in the economy reflects a shift in currency demand as more Nigerians adopt electronic payment channels and rely less on physical cash.

 

Cardoso, who spoke after the Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, said the scarcity was driven by market dynamics rather than any decision by the central bank to remove the notes from circulation.

 

“Unless the central bank states otherwise, Nigerians should assume that all existing denominations remain legal tender,” he said, urging businesses and individuals to continue accepting the notes.

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The governor’s comments come amid concerns among consumers and small businesses over difficulties accessing lower-value naira notes, which remain important for everyday transactions such as transportation, petty trading and market purchases.

He explained that the financial system is evolving towards greater digital adoption, reducing the demand for physical cash, particularly smaller denominations.

“As more people adopt digital payment channels, the demand for coins and lower-denomination notes naturally declines. If there is less demand for them, there is less need to print and circulate them in large quantities,” Cardoso said.

He added that inflation and the depreciation of the naira have also weakened the purchasing power of lower-value notes, making them less useful for many transactions.

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

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

On inflation, Cardoso reaffirmed the CBN’s commitment to achieving single-digit inflation despite external pressures that have slowed progress in reducing price growth.

He said the country recorded 11 consecutive months of disinflation before unexpected global economic shocks disrupted the pace of improvement.

“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.

“Unfortunately, we have experienced external shocks that were not anticipated and have lasted much longer than anyone expected. As for our single-digit inflation target, we remain committed to it.”

Responding to the International Monetary Fund’s (IMF) assessment that the naira is undervalued, with a fair value estimated at about N1,150 to the dollar, Cardoso said the exchange rate should continue to be determined by market fundamentals.

“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.

The CBN governor said factors such as oil exports, foreign direct investment, domestic productivity and import substitution would determine where the exchange rate eventually settles.

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He also expressed confidence in the current foreign exchange market, saying Nigeria now has a more functional and transparent system, with turnover exceeding $1 billion on some trading days, reflecting improved liquidity and growing confidence.