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The Central Bank of Nigeria has recently released data indicating a substantial rise in the amount of currency in circulation outside banks within the country. As of June 2023, the currency in circulation has reached an impressive N2.26tn.
According to figures obtained by Punch, the currency outside banks surged by a remarkable 185.68 per cent, equivalent to N1.47tn, between January 2023 (N792.18bn) and June 2023 (N2.26tn). This notable increase follows a previous dip of 235.03 per cent (N982.09bn) at the end of February, originating from the implementation of the Naira redesign policy by the CBN. The policy aimed to revamp the country’s currency system and seems to have contributed to the fluctuation in circulation figures.
To compute the currency in circulation in Nigeria, the apex bank utilized an ‘accounting/statistical/withdrawals and deposits approach.’ According to the CBN, “Currency-in-circulation is defined as currency outside the vaults of the central bank; that is, all legal tender currencies in the hands of the public and in the vaults of the Deposit Money Banks.”
This substantial surge in currency in circulation outside banks signals potential changes in the country’s economic landscape and may have implications for monetary policy and overall financial stability. As the Central Bank of Nigeria continues to monitor the situation closely, further analyses will be crucial to comprehend the underlying factors driving these fluctuations.
