CBN reports record high of N982bn in currency circulation

Due to the Central Bank of Nigeria’s naira redesign policy, the country’s currency decreased by 235.03% to N982.09bn at the end of February from N3.29tn at the end of October 2022.

According to figures from the CBN, N2.3tn was taken out of circulation during the time under review.

In November 2022, December 2022, and January 2023, respectively, the currency in circulation increased from N3.16 trillion to N3.29 trillion and N1.38 trillion, as reported by the CBN.

In October 2022, the CBN Governor, Godwin Emefiele, announced plans to redesign the previous N200, N500, and N1,000 notes.

Additionally, Emefiele set deadlines for Nigerians to exchange their previous notes for the new ones.

The governor lamented the difficulties of managing the currency, including the public’s hoarding of banknotes, statistics indicating that more than 80% of the currency in circulation was outside of commercial banks’ vaults.

He added that other obstacles included a lack of clean and pristine banknotes, which led to a negative perception of the CBN, an increased risk to financial stability, and several security reports indicating an increasing ease and risk of counterfeiting.

Over the most recent couple of years, the CBN has recorded altogether higher paces of duplicating, particularly with respect to the higher groups of N500 and 1000 notes, he said.

At the termination of the cutoff time for the old notes, because of the shortage of the new naira notes, which exposed Nigerians to difficulty, the President, Significant General Muhammadu Buhari (retd) endorsed the proceeded with utilization of the old N200 as legitimate delicate till April 10.

However, on March 3, the Supreme Court extended the old N200, N500, and N1,000 notes’ legal tender status until December 31, following a lawsuit brought by some state governments against the Federal Government regarding the naira redesign policy.

The CBN issued an official order to commercial banks on Tuesday, ten days after the Supreme Court’s decision.

The CBN defines currency-in-circulation as currency outside of the central bank’s vaults; that is, all currency that is legal tender and is held in the Deposit Money Banks’ vaults and in the public’s possession.

The CBN expressed that it utilized the “bookkeeping/measurable/withdrawals and stores approach” to process the money available for use in Nigeria.

Tracking the movements of currency in circulation transaction by transaction was part of this strategy.

It stated that the CIC was recorded for each withdrawal made by a DMB at one of the CBN’s branches, as well as for each deposit made by a DMB at one of the CBN’s branches.

The CBN’s CIC account keeps track of all of the transactions, and the account’s balance at any given time represents the country’s circulating currency.

The analysis of the currency in circulation, according to the apex bank, revealed that the general public, who keep a lot of the new banknotes, held a significant and growing portion of the naira outside of the commercial banking system.