The latest report issued on Wednesday, July 8, by the Central Bank of Nigeria (CBN) revealed that Nigeria’s total circulated currency contracted by 2.6 per cent or N60billion to N2.29 trillion in June from N2.35 trillion in May.
1st News had reported that the CBN deployed a couple of money control interventions recently; the latest being its decision to levy banks N122 billion last week before weakening the Naira at a retail forex auction in a move to tighten Naira supply and curtail liquidity.
Currency in circulation (CIC) rose steadily during the lockdown relative to pre-pandemic days, the central bank data showed, with the figure leaping from N2.29 trillion in March to N2.3 trillion in April.
“Currency in circulation at end-November 2019 rose by 9.9 per cent to N2.2tn; in contrast to the decline of 0.4 per cent at the end of the third quarter of 2019.”
“Currency in circulation is defined 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),” it said.
In order to arrive at an accurate statistic for the currency in circulation figure, the CBN adopted accounting/statistical/withdrawals and deposits approach; which monitors movements in currency circulation on a transaction by transaction basis.
This means, for every withdrawal made by a DMB at one of CBN’s branches; an increase in the CIC was recorded.
By the same token, for every deposit made by a DMB at one of CBN’s branches, a decrease in the CIC was recorded.
All the transactions are then recorded in the CBN’s CIC account; and the balance of the account indicates Nigeria’s total circulated currency.
A larger portion of the currency in the country; outside the commercial banking system was held by the general public, the statistics showed.