01 The Hour
Monday
9 January 2023. Nigeria. Reconstructed to the day.
The withdrawal limits took effect that day. At a cash machine, 20,000 naira in a day and 100,000 in a week. At a point of sale terminal, 20,000 in a day. Over the counter, 100,000 a week for a person and 500,000 for a company, with a processing fee of 5 or 10 per cent on anything above.
One line in the same circular decided what those numbers meant at the machine. Only denominations of 200 naira and below were to be loaded into the machines.
Twenty thousand naira, paid in 200s, is a hundred notes.
02 The Sequence
23 Nov 2022 The redesigned 200, 500 and 1,000 naira notes were launched. Holders of the old notes were told to deposit them before 31 January 2023, after which those notes would lose their status as legal tender.
6 Dec 2022 The circular to the banks. Weekly counter withdrawals of 100,000 and 500,000 naira, with processing fees of 5 and 10 per cent above those. Third-party cheques above 50,000 no longer payable over the counter, the standing limit of 10 million on clearing cheques unchanged. Only denominations of 200 and below to be loaded into the machines. Cash machine withdrawals capped at 20,000 a day, and point of sale terminals at 20,000 a day.
15 Dec 2022 The new notes entered circulation. The limits in the circular were to take effect on 9 January.
Jan to Feb 2023 Long queues formed at banking halls and at cash machines, and many people could not obtain the new notes. The supply of them fell far short of the volume needed to meet basic needs. There were protests in some parts of the country, and attacks on banks.
31 Jan to 17 Feb 2023 The deadline was extended by ten days to 10 February, with a further grace period to 17 February for depositing old notes at the central bank under the relevant sections of its Act. On 17 February the old notes ceased to be recognised as legal tender.
8 Feb 2023 On a suit filed by three states, the Supreme Court ordered that the 10 February deadline not be implemented pending determination of the matter, and that the old and new notes continue to circulate.
16 Feb 2023 A national broadcast directed the release of the old 200 naira note back into circulation, to run alongside the new notes for sixty days to 10 April, and stated that the old 500 and 1,000 notes had ceased to be legal tender.
3 Mar 2023 The Supreme Court held that the directive to redesign the notes and withdraw the old ones without due consultation was invalid, and ordered that the old 200, 500 and 1,000 notes remain legal tender until 31 December 2023. On 13 March the central bank directed the banks to comply, and both sets of notes ran together.
Late 2023 The central bank clarified that the old 200, 500 and 1,000 notes would continue to be accepted as legal tender beyond 31 December 2023.
03 The Hidden Dependency
The circular set two numbers in the same list and they work on each other. A cap of 20,000 naira a day at the machine, and an instruction that only the 200 note and below may be loaded into it.
The same daily ceiling was a hundred notes under one rule and twenty under the other. Whatever a given machine holds, it holds a number of notes, not a sum of money, and the circular had just decided which of those two things the sum would be.
The three notes being redesigned were the 200, the 500 and the 1,000. The rule permitted the machine to dispense only the smallest of them, at the same moment the country was being asked to exchange all three.
The same daily ceiling was a hundred notes under one rule and twenty under the other.
04 What Still Worked
The Monthly Exception
In compelling circumstances, not more than once a month, a withdrawal above the limits was permitted for legitimate purposes, up to 5 million naira for a person and 10 million for a company, subject to the processing fees, enhanced due diligence, and information uploaded to a portal the central bank had created for it.
The Clearing Cheque
Third-party cheques above 50,000 naira were no longer eligible for payment over the counter, but the existing limit of 10 million naira on clearing cheques stood untouched. The instrument that never becomes cash kept its old ceiling.
The Old Two Hundred
From 16 February the old 200 note was put back into circulation for sixty days, running alongside the new notes while the old 500 and 1,000 were declared no longer legal tender. The smallest of the three redesigned notes was the one brought back first.
05 The Document
The Document 6 December 2022
A circular to the deposit money banks and other financial institutions, headed Naira Redesign Policy, Revised Cash Withdrawal Limits, signed by the Director of Banking Supervision.
It opens by referring back to the launch of the redesigned notes a fortnight earlier and to the cashless policy, then runs as a numbered list of instructions. Counter limits. Cheque rules. The denomination to be loaded into the machines. The daily caps at machine and terminal. The once a month exception and the information to be uploaded for it.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018, Afghanistan 2021, Nigeria 2023.
2 A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling is paid only in the denominations the machine is permitted to hold, so a ceiling and a denomination rule set together decide how many notes a withdrawal is, and a ceiling has to be raised alongside the denominations that pay it when the existing notes no longer carry it.
Observed: Zimbabwe 2008, Nigeria 2023.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
16 When the persons under sanction become the governing institutions of a country, the prohibition reaches ordinary payments that merely touch the state, and access is restored by successive general licences written by activity, so what decides whether a payment can be made is which licence it falls under.
Observed: Afghanistan 2021.
17 One foreign currency held in one banking system can carry two prices at once, according to whether a balance was credited before or after the date the restrictions began, so the older money converts only at a rate the authority names.
Observed: Lebanon 2019.
18 A payment abroad can be made conditional on prior approval by a committee working to a ceiling set for the whole country each day, so what a firm can pay turns on the capacity of the approval process rather than on the balance in its account.
Observed: Greece 2015.
19 Scarce foreign exchange can be rationed through the commercial banks under published guidelines, with the central bank selling only the net requirement at a daily auction and checking compliance through reporting after the fact rather than approving each payment in advance.
Observed: Iceland 2008.
Changed today: Entry 1 gained Nigeria 2023, where the old notes lost legal tender status and the supply of the new ones fell far short of what was needed. Entry 8 was refined and gained Nigeria 2023: it had been written around a ceiling being raised to match new denominations, on the 2008 case alone, and here the ceiling and the denomination rule were issued together in the same circular, so the entry now states the relation rather than one direction of it.