Despite lockdown introduced to contain the spread of COVID-19 in the country, huge cash transactions in the economy had continued to rise as currency in circulation rose to N2.35tn in May.
Statistics obtained from the Central Bank of Nigeria on Monday showed that the figure, which stood at N2.29tn as of the end of March, rose to N2.3tn as of the end of April.
The apex bank stated, “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 end of third quarter 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 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 & 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.
That is, 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.
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.