What’s the difference between a quack doctor and a quack economist? A quack doctor’s advice kills in arithmetic progression i.e. one person at a time while a quack economist advice kills in exponential progression not even in geometric progression i.e. a whole generation at a time. The introduction of N5, 000 note is a quack economic advice.
To fully understand the impact, please see table below explaining the difference between Arithmetic, Geometric and Exponential patterns:
| Type | Example | Solution |
|---|---|---|
| Arithmetic | 1,3,5,7,9… | Add 2 each time. |
| 99,90,81,72… | Subtract 9 each time | |
| Geometric | 1,2,4,8,16… | Multiply the previous number by 2. |
| 1000,100,10,1… | Divide the previous number by 10. | |
| Geometric – Exponential | 2,4,16,256… | Square the previous number. |
| 1,4,9,16,25… | 12,22,32,42,52… |
Look Out: an exponential pattern is actually a type of geometric pattern. However, to help explain things, we made them a subcategory.
How do we effectively make the country cashless? Remove large denominations from circulation and let N50 be the highest denomination in circulation. This may increase the cost of cash handling by the bank but it will force citizens to embrace the cashless tools. The cap on cash deposit and withdrawal is not as effective as forcing people to carry large amount of money. CBN should remember that it has a fiduciary duty to the people NOT the banks
Every time I hear the Cashless argument by CBN which include reduce cash handling cost of the bank and increase bank revenue through transfer charges; I begin to wonder if the CBN is suppose to regulate the bank for the Nigerian citizens or make the banks richer. I hope we do NOT forget that Banks are privately owned enterprises with profit motivations. Why encourage transfer charges if your aim is to encourage a Cashless society?
I am not going to touch the aspect of inflation but will allow case studies of countries speak that to you. Countries with large denominations in circulation include Zimbabwe, Tanzania and Uganda. I am fortunate to have been in Uganda and I dear say you can literarily smell the poverty stink. Compare to countries like the US, China, Ghana and UK which from personal observation is evidently progressive. Before I get hatched, I am talking about currencies in circulation NOT currencies they have.
On a final note, N5, 000 note introduction is more dangerous than the oil subsidy removal without infrastructures in place. The impact may not be more apparent but the impact is deadlier. The word cashless does not mean less cash in quantity; it means less cash in everyday transaction. The argument that you may be able to carry less quantity of cash is immediately flawed by the promotion of cashless technology by CBN earlier this year which pivotal to a cashless economy. Long Live the Federal Republic of Nigeria.
Table Reference: http://www.shmoop.com/basic-algebra/arithmetic-geometric-exponential-patterns.html
