CBN Reminds Banks Of Consequence Of Dollarisation Of Economy

The Central Bank of Nigeria on Friday reminded all banks of the consequences of the rising trend of currency substitution and dollarisation of the economy. The CBN, in a circular issued by its Banking Supervision Department, warned all banks to desist from collecting and using dollars for transactions. It reiterated that the Naira currency remained the only legal tender in the country. The apex bank reminded the banks that Section 15 of the CBN Act 2007 provided that the unit of currency in Nigeria shall be the Naira. The circular said: “Section 20 (1) of the same Act provides that the currency notes issued by the Bank shall be legal tender in Nigeria, at their face value, for the payment of any amount. “Section 20 (5) further provides that a person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine or 6 months imprisonment. “Based on the above provision, the general public is hereby warned that it is illegal to price or denominate the cost of any product or service (Visible or Invisible) in any foreign currency in Nigeria. “And no business offer or acceptance should be consummated in Nigeria in any currency other than the Naira. “Consequently, deposit money banks operating in Nigeria are advised to desist from the collection of foreign currencies for payment of domestic transactions, on behalf of their customers.” The CBN, however, said the warning was without prejudice to foreigners, visitors and tourists, who are encouraged to use their cards for payments or exchange their foreign currency for local currency. The CBN said appropriate sanctions shall be meted on any bank that breaches the regulation. The bank noted that the circular superseded the provisions of Memorandum 16 of the CBN Foreign Exchange Manual and Paragraph (XI) Section 4.2.1 of the Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2014/2015.