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CBN increases currency in circulation by pushing N418bn into the economy

ACCORDING to figures obtained from the Central Bank of Nigeria, the currency in circulation increased by N418 billion from N2.91 trillion in December 2020 to N3.33 trillion in December 2021.

According to CBN data, currency in circulation increased by 19.06 percent from N2.44 trillion in December 2019.

“The growth in CIC reflected the continued dominance of cash in the economy,” the CBN said in its report on currency operations.

The report further read in part, “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 (N5, 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.”

Electronic payment options, according to the CBN, were introduced with the primary goal of reducing the amount of naira notes used for transactions, not to eliminate cash usage.

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

The CBN defines currency in circulation as all legal tender currency in the hands of the general public and in the vaults of Deposit Money Banks that is not held in the central bank’s vaults.

To calculate the currency in circulation in Nigeria, the CBN said it used the “accounting/statistical/withdrawals & deposits approach.”

This method entailed tracking the movements of currency in circulation on a transaction-by-transaction basis, according to the report.

According to the CBN, every withdrawal made by a Deposit Money Bank at one of the CBN’s branches results in an increase in CIC, while every deposit made by a DMB results in a decrease in CIC.

The CBN’s CIC account keeps track of all transactions, and the account’s balance at any given time represents the country’s currency in circulation.

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