Tags in this story
BCH, BTC, Central Bank of Nigeria, cryptocurrency, currency rejection, devaluation, inflation, Nigeria, Reserve Bank of Zimbabwe, U.S. dollar, U.S. dollar banknotes
In early April 2021, the Central Bank of Nigeria (CBN) issued a notice warning Nigerian institutions to stop rejecting old or lower denominations of US dollar banknotes. After the CBN issued a warning, the warning was “overwhelmed by public complaints from banks and other authorized foreign exchange dealers for rejecting such bills.”
In a circular issued by Ahmed Umar, the director of the CBN Currency Operations Department, the central bank stated that it would sanction “institutions that refuse to accept customers’ old/lower denomination dollar banknotes”.
In addition, the CBN warned against letting the same agencies stop smearing/stamping US dollar banknotes, as these “will always pass the identity verification test during processing or sorting.”
At the same time, Nigeria is not the only African country hit by inflation. Zimbabwe has also experienced currency depreciation in the past few years, and rejecting the old or broken dollar is still a problem. At one time, the U.S. Embassy in Harare was forced to issue a statement to reassure Zimbabweans that all U.S. banknotes remain legal tender no matter when they are issued.
The U.S. Embassy stated in its September 2020 statement:
Any visibly soiled, dirty, stained, damaged, broken, torn, torn or worn banknote is obviously more than half of the original banknote and does not require special inspection to determine its value, so it is not considered damaged .
The Reserve Bank of the Bank of Zimbabwe (RBZ) later reiterated this message when attempting to end the practice.
Despite these guarantees, torn or worn-out US dollar banknotes are still rejected by businesses and the public. In addition, the constant rejection of old or worn-out US dollar banknotes has created a new black market for such currencies. As one report pointed out, some Zimbabwean currency dealers demanded a premium of up to 50% on some worn-out US dollar bills.
Although the U.S. dollar is a widely accepted alternative to local fiat currencies, it is this shortcoming that makes cryptocurrency a better choice. For example, in addition to being immune to local inflation and depreciation, crypto assets such as Bitcoin (BTC) or Bitcoin Cash (BCH) also allow users to pay any amount without worrying about the value of the currency falling or banknotes becoming change. Case.
In situations where cross-border payments are required, it is again proven that cryptocurrency is a better option, because the recipient will get the exact amount that should be paid to them. As the central banks of Nigeria and Zimbabwe know, coercion does not force people to accept any currency, including the U.S. dollar.
Instead, innovative and secure funds are more likely to overcome this challenge.
What are your thoughts on rejecting old or damaged US dollar banknotes? Tell us what you think in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for reference only. It is not a direct offer or solicitation of an offer, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. The company or the author is not directly or indirectly responsible for any damage or loss caused or allegedly caused by the use or reliance on any content, goods or services mentioned in this article or related thereto.