Central Bank Governor, Sanusi Lamido Sanusi on Wednesday said the apex bank is helpless in the effort to bring down the high interest rate charged by commercial banks in the country.
The apex bank boss who disclosed this while appearing before the House of Representatives committee on Banking and Currency over fake naira notes in ATM machine also said the only antidote to solving the fake currency problem is to redesign the Nara.
He however regretted that the earlier move to do this was frustrated by the public outcry against the introduction of N5000 note by Nigerians.
“Delivering a low rate of interest is the easiest thing for us to do because the central bank prints money. An interest rate comes down when you have a lot of money. It’s not a problem. If you want interest rate of 2 percent, it’s not a problem. We simply double and triple the money supply in the system; come out and buy government treasury bills, buy bonds in the market, and that’s it and the interest rate would crash.
“So, it’s not a problem delivering low interest rates. The question is: why are interest rates high, and what is our role in central bank? Our hands are tied by the law. The central bank Act clearly and correctly defines what our core function is. And we are to deliver price stability. We are to protect the external value of the currency. And we are to manage the country’s reserves,” he explained.
Sanusi, who believed that redesigning the naira would make it impossible for counterfeiters to counterfeit the naira, regretted that the N5,000 notes earlier proposed by the apex bank is being delayed.
“Unfortunately, redesign suffered because of all the noise around N5,000, and therefore, it’s been delayed because that is what would have made it impossible for counterfeiters to counterfeit. They would have to take another five, six, seven years before they learn how to counterfeit. By which point, the central bank should be redesigning the notes again.
“I suppose that at some point, the country would have to visit this issue of redesigning the notes. But at the moment, based on popular demand, we have had to step down the redesign,” Sanusi said.
Sanusi also hinted that the hands of CBN are tied with regards to delivering low interest rates.
He hinted that it would be very easy for the apex bank, if it doubles the money that is supplied in the system.
He, however, warned that it would lead to a crashed interest rate, which would see the country going back to square one.
