Cash transactions on the rise have led to a substantial increase of ₦1.7 trillion in Nigeria’s currency in circulation.
Reports from Africa Today News, New York, citing data from the Central Bank of Nigeria, disclosed that the currency in circulation had hit ₦2.7 trillion by the end of August.
The apex bank’s naira redesign policy led to a reduction in the currency in circulation, which stood at ₦982.1 billion as of the close of February 2023.
Once the policy came to an end, the currency saw a continuous rise, with cash that had been temporarily withdrawn to promote electronic payments being reintroduced into the economy.
The currency in circulation in the country, influenced by the naira redesign policy of the CBN, experienced a substantial 235.03 percent drop, falling to N982.1 billion by the end of February from N3.29 trillion at the close of October 2022.
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Figures sourced from the CBN show that a total of N2.3 trillion was removed from circulation during the reviewed period.
The CBN’s description of currency in circulation covers all legal tender currency in the possession of the general public and within the vaults of Deposit Money Banks, excluding the currency held within the central bank’s own vaults.
According to the CBN, the method employed to determine the currency in circulation in Nigeria was the ‘accounting/statistical/withdrawals & deposits approach.
The CBN described this approach as involving the meticulous tracking of currency movements in circulation, transaction by transaction.
The CBN’s explanation clarifies that when a Deposit Money Bank withdraws funds at a CBN branch, it results in an expansion of Currency in Circulation (CIC); conversely, when a DMB makes a deposit at a CBN branch, it leads to a decline in CIC.