Currency in circulation fell by N107.08bn from N3.35tn in April to N3.24tn in July, latest figures on currency from the Central Bank of Nigeria has revealed.
According to the CBN, the CIC which stood at N3.33tn in May fell to N3.25tn in June. The CBN recently warned Deposit Money Banks against accepting mutilated Naira notes, explaining that they were not the real currencies in circulation. 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, according to the apex bank.
The CBN stated that it employed the accounting/statistical/withdrawals and deposits approach to compute the currency in circulation in Nigeria. This approach involves tracking the movements in currency in circulation on a transaction-by-transaction basis. It said for every withdrawal made by a DMB at one of CBN’s branches, an increase in the CIC was recorded, adding that for every deposit made by a DMB at one of CBN’s branches, a decrease in the CIC was recorded. The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.
According to the apex bank, analysis of the currency in circulation showed that a large and increasing proportion of the Nigerian currency outside the commercial banking system was held by the general public hoarding a lot of the new banknotes.
The CBN recently warned Deposit Money Banks against accepting mutilated Naira notes, explaining that they were not the real currencies in circulation. It added that any composed banknote discovered in the deposit of DMbs would attract penalty of 400 per cent of the value.