In October 2022, over ₦3 trillion was in circulation. After that discovery, the Central Bank of Nigeria (CBN) decided it would pull back most of the currencies outside the bank.
That move triggered scarcity of the Naira that stifled the economy and killed some small businesses.
Again, however, there appears to be much money in circulation again.
Unfortunately, the petrol subsidy removal has made things difficult in Nigeria.
Indeed, if not for the devaluing of the Naira, most Nigerians would have been happy that there is more money in circulation today.
As of today, there is more money in circulation than what was obtainable some six months ago.
According to the Central Bank of Nigeria (CBN), Currency in circulation jumped by ₦1.7 trillion as cash transactions increased.
The CBN, On Thursday, revealed that currency in circulation had risen to ₦2.7 trillion as of the end of August.
Restriction was placed on cash transactions by the CBN, because it wanted to redesign the Naira and introduce a cashless policy that failed.
CBN Mopped Up ₦2.3 Trillion
This led to a gradual fall of cash transactions in Nigeria. Records show it moved from ₦3.29 trillion at the end of October 2022, to ₦982.1 billion as of the end of February 2023
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However, the Naira maintained a steady rise when the policy ended. Cas earlier withdrawn from circulation in order to drive e-payments, was pushed back into the economy.
Figures obtained from the CBN revealed that ₦2.3 trillion was mopped up from circulation during the period under review.
The CBN defined all legal tender outside the vault of the CBN as currency in circulation.
It said it employed the “accounting/statistical/withdrawals & deposits approach” to compute the currency in circulation in Nigeria.
Basically, this approach involved tracking the movements of currency in circulation on a transaction-by-transaction basis.
According to the CBN, 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.
