CBN Pushed N2.907trn Cash Into Circulation In 2020

Despite the rising inflation, the Central Bank of Nigeria (CBN) allowed about N2.907 trillion or 19.06 percent more currency in circulation in the economy as at end-December 2020 compared to the N2.441.67tr currency in circulation at end December, 2019.

The CBN disclosed this in its Annual Currency Operations Report for 2020. Headline inflation spiked to 15.8 percent in December 2020 and high currency in circulation could be a factor.

It said the “Currency-in-Circulation (CIC) increased by 19.06% from N2,441.67bn at end December, 2019 to N2,907.13bn at end-December 2020. The growth in CIC reflected the continued dominance of cash in the economy. Analysis of the CIC shows that a greater proportion was in higher denomination banknotes (N100, N200, N500 and N1000).”

It further explained that the “higher denomination banknotes together accounted for 63.47 per cent and 98.08% of the total CIC, in terms of volume and value, respectively. The volume of lower denomination banknotes (N5, N10, N20, N50), accounted for 28.43 per cent of the total CIC and 1.92 per cent, in terms of value as at end-December 2020.”

On currency processed in 2020, the report said “a total of 173,585 boxes of banknotes valued at N980,758 million was processed, compared with 260,651 boxes of banknotes valued at N1,533,729m in 2019. This represents a decrease of 33.40 per cent in the number of boxes or N552,971m in value of processed banknotes.”

On revenue from currency management, it said “the sum of N6,499.91m was generated as income from penal charges on deposits of unsorted banknotes and charges for authentication of foreign currency deposits by DMBs in 2020.”

It noted that the “amount represented a decrease of N6,743.01m (50.91%), compared with N13,242.91 million in 2019. The decrease was attributed to reduced deposits by DMBs, on account of restrictions to curb the spread of COVID-19 pandemic.”