In a recent report released by the Central Bank of Nigeria (CBN), currency outside banks in the country reached a staggering N2.26tn at the end of June 2023. This represents a significant increase of 185.68 per cent, equivalent to N1.47tn, since January 2023, when it stood at N792.18bn.
RateCaptain obtained the figures from the CBN, revealing that the surge in currency outside banks has been remarkable in the first half of 2023. Additionally, the report disclosed that the currency in circulation in the nation also rose considerably, marking an 87.05 per cent increase (N1.21tn) from N1.39tn in January 2023 to N2.6tn in June 2023.
The sharp rise in currency outside banks and overall circulation follows a significant dip earlier in the year. In February 2023, currency in circulation had dropped by 235.03 per cent to N982.09bn compared to N3.29tn at the end of October 2022. The decline was attributed to the implementation of the naira redesign policy by the CBN. During the intervening period, an impressive N2.3tn was withdrawn from circulation.
The CBN clarified the definition of “currency-in-circulation,” stating that it refers to legal tender currencies held by the public and in the vaults of Deposit Money Banks outside the central bank’s vaults. This encompasses all physical currency actively used for transactions.
To compute the currency in circulation in Nigeria, the CBN adopts the “accounting/statistical/withdrawals and deposits approach.” This method ensures a comprehensive and accurate assessment of the amount of currency in the economy, providing valuable insights for monetary policy.
Economic analysts have been closely monitoring these developments, as they can have a significant impact on the nation’s economy. The surge in currency outside banks could signal increased consumer spending, investment, and economic activity. However, authorities also need to be cautious about potential inflationary pressures that may arise as a result.
As the Nigerian economy continues to evolve, the CBN will likely keep a close eye on currency trends and implement necessary measures to maintain stability and promote growth. Additionally, policymakers may need to address the root causes of the fluctuations to ensure a balanced and sustainable economic expansion.
It remains to be seen how these developments will play out in the coming months, but the CBN’s commitment to monitoring and regulating the currency in circulation is expected to guide the country through any potential economic challenges.