Nigeria’s stock of money in circulation stood at N2.29 trillion at the end of June 2020, representing a decline of N52.5bn from N2.35tn at the end of May.
Data sourced from the Central Bank of Nigeria showed that there was a steady rise in cash in circulation during the lockdown introduced in some states to contain the COVID-19 pandemic in the country.
Statistics obtained from the CBN showed that currency in circulation, which stood at N2.29tn at the end of March, rose to N2.3tn in April.
The apex bank said, “Currency in circulation at end-November 2019 rose by 9.9 per cent to N2.2tn, in contrast to the decline of 0.4 per cent at the end of the third quarter of 2019.
“The development, relative to the level in the preceding quarter, reflected mainly the increase in its currency outside banks component and seasonal factors.
“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.”
The CBN stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This approach involved 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 who hoard a lot of the new banknotes.