CBN Increases Currency In Circulation By ₦418bn

The Central Bank of Nigeria (CBN) increased the currency in circulation from ₦2.91tn in December 2020 to ₦3.33tn in December 2021.

The data released by the apex bank revealed that the currency in circulation had increased by 19.06 per cent from ₦2.44tn recorded as of December 2019.

CBN in its report on currency operations disclosed that “the growth in CIC reflected the continued dominance of cash in the economy.”

The apex bank in its report wrote, “Analysis of the CIC shows that a greater proportion was in higher denomination banknotes (N100, N200, N500 and N1000). The higher denomination banknotes together accounted for 63.47 per cent and 98.08 per cent of the total CIC, in terms of volume and value, respectively.

“The volume of lower denomination banknotes (₦5, 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.”

CBN further stated that electronic payment options were introduced with a major aim of reducing the number of naira notes used for transactions, but not to eliminate cash usage.

According to CBN, cashless transactions using the e-payments would help to increase convenience, provide more service options, reduce the risk of cash-related crimes, and provide cheaper access to (out-of-branch) banking services and access to credit.

The currency in circulation was defined as currency in the hands of the general public and in the vaults of the Deposit Money Banks.

The CBN said it employed the “accounting/statistical/withdrawals & deposits approach” to compute the currency in circulation in Nigeria.

It said this approach involved tracking the movements of currency in circulation on a transaction-by-transaction basis.

The apex bank further stated that for every withdrawal made by a Deposit Money Bank at one of CBN’s branches, an increase in CIC is recorded; and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC is 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.