Currency In Circulation Falls By ₦42.43bn In Two Months

The Central Bank of Nigeria has reveal that the currency in circulation fell by ₦42.43bn between January and March.

The apex bank in a data released disclosed that the currencies, which stood at ₦3.29tn as of the end of January, fell to ₦3.25tn by the end of March.

The CBN recently warned Deposit Money Banks against accepting mutilated naira notes, explaining that they were not the real currencies in circulation.

In a circular to the DMBs titled ‘Treatment of composed banknotes’, CBN disclosed, “The management of the Central Bank of Nigeria observed with concern the increase number of composed banknotes deposited by DMBs and request for replacement of such banknotes by members of the public.

“The existence of composed banknotes in the economy falsifies the true value of currency in circulation and can also be avenue for fraudulent activities.

“A composed banknote is a banknote that comprises of several parts of different banknotes of the same denomination put together with the intention of receiving value.”

The apex bank disclosed that any composed banknote discovered in the deposit of DMbs would attract penalty of 400 per cent of the value.

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.