In the aftermath of its Naira redesign policy, the Central Bank of Nigeria (CBN), said currency in circulation (CIC) in the country rose to N1.68 trillion at the end of March 2023.
This was even as it stated that its special intervention reserves currently stands at N419 billion.
Currency-in-circulation is defined as amount of money outside the vaults of the central bank; that is, all legal tender currency in the hands of the public and in the vaults of the Deposit Money Banks (DMBs). The currency in circulation in the country had dipped by a 235.03 per cent to N982.09 billion at the end of February from N3.29 trillion recorded at the end of October 2022, on the back of the naira redesign policy.
However, data obtained from the CBN’s website revealed that the CIC grew by 71 per cent in one month to stand at N1.68 trillion as against N982.09 billion recorded in the previous month.
According to the apex bank, it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This approach involved tracking the movements of currency in circulation on a transaction-by-transaction basis. It said for every withdrawal made by a commercial bank at one of CBN’s branches, an increase in the CIC was recorded, and for every deposit made by a bank, at one of CBN’s branches, a decrease in the CIC was recorded.
Reacting to the development, analysts said the figure recorded showed that the CBN left no stone unturned in its bid to improve the circulation of notes in the country after the hardship suffered by Nigerians due to the cash crunch in the first two months of 2023. CBN Governor, Godwin Emefiele, in October 2022, announced plans to redesign the old N200, N500 and N1,000 notes.
Emefiele, whilst announcing the deadlines for Nigerians to swap their old notes with the new notes, lamented about the challenges associated with currency management, including the hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of currency-in-circulation was outside the vaults of commercial banks.
He added that in the last few years, the CBN has recorded significantly higher rates of counterfeiting, especially in regard to the higher denominations of N500 and 1000 notes.