He said this at the national assembly on Monday, while delivering a lecture at the public hearing on the 2017 budget.
Mailafia said it would be impossible to bring down food prices with fake currency in circulation.
“Twenty percent of currency circulating in Nigeria is fake; you can’t bring down food prices if you have fake currency circulating,” he said.
Mailafia said apart from the foreign exchange crisis, the refusal of CBN to effectively regulate commercial banks contributed to the recession in the country.
“I am a former deputy governor of CBN so when it comes to regulations, we could have done better,” Mailafia said.
“If you have recession, you have to open a situation room, where experts will be monitoring the economy daily. These experts will work to on ways to get the country out of the situation.”
He advised the authorities to take concrete steps to prevent the naira from plunging “down forever”.
“If nothing is done, the naira will continue to plunge down forever,” he said.
“This is where boldness in economic policy is needed. Though the current administration inherited recession, Nigerians expect them to tackle it. That was what the Obama administration did. We need stabilisation of the exchange rates.”
He advised that the budgetary process should be structured in a way that would ensure rapid economic recovery.