Currency in Circulation Hits New High
As latest data indicate, the currency in circulation (CIC) reached a new high of N2.99 trillion at the end of October 2023, it appears that the Central Bank of Nigeria (CBN)’s policies and leadership changes have been playing a significant role in shaping the country’s currency landscape.
This represents an 8 per cent or N230 billion increase from N2.76 trillion recorded in the previous month (September) and an increase of N1.6 trillion from N1.39 trillion recorded at the beginning of 2023.
The CBN defines the currency in circulation as currency outside the vaults of the Central Bank – that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks (DMBs). With this new high of almost N3 trillion, currency in circulation appears to be on the rise to the level it was in October 2022 (N3.29 trillion) before the naira redesign policy of the CBN.
Economic analysts, believe the development may be attributed to the apex bank’s decision to extend the deadline for the old notes and the assurance of sufficient currency stock may indicate efforts to stabilise the situation and address any cash scarcity concerns.
At a meeting of the Monetary Policy Committee (MPC) in October 2022, the former CBN Governor Godwin Emefiele, said that the increase in inflationary pressure was being fueled by the prevalence of N1,000 and N500 bills in circulation.
Emefiele stated in October 2022 that the banknotes of N200, N500, and N1,000 would be redesigned. He also announced the introduction of new notes, giving a deadline for old N200, N500 and N1,000 notes.
Emefiele said, “Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks on an order of first-come-first-serve basis. Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins.”
He bemoaned the difficulties of managing cash, citing widespread hoarding of banknotes as an example, with more than 80 per cent of all currency in circulation stored in places other than commercial banks’ vaults.
This apparently led to the drop of money in circulation from N3.29 trillion at the end of October 2022 to N1.38 trillion by the end of January 2023. According to the CBN’s numbers, this is a decline of N1.91 trillion over the time under review.
Also, the total amount of naira in circulation in Nigeria dropped to N982 billion in February 2022, from N1.39 trillion in January 2023. This was the lowest level of circulating Naira since November 2008.
Essentially, the CBN mopped over N2 trillion in circulating cash between October 2022 and February 2023.
