The Central Bank of Nigeria (CBN) has disclosed a significant surge in Currency in Circulation (CIC) within the Nigerian economy, reaching N19.67 trillion in the first nine months of 2023. This notable increase follows a depreciation in the figure at the end of February, which was attributed to the Naira redesign policy.
CIC Fluctuations in 2023:
- January 2023: N1.39 trillion
- February 2023 (post Naira redesign policy): N982.1 billion
- After policy concluded: Steady increase to N1.68 trillion
- Subsequent months: Continuous rise to N2.76 trillion in September 2023
Defining Currency in Circulation (CIC): The CBN defines CIC as all legal tender currency held by the general public and within the vaults of Deposit Money Banks, excluding the Central Bank’s own vaults.
Methodology for Computing CIC:
- The CBN employs the “accounting/statistical/withdrawals & deposits approach” to calculate CIC.
- This involves meticulously tracking the movement of currency in circulation on a transaction-by-transaction basis.
Transaction Impact on CIC:
- Withdrawals from Deposit Money Banks at CBN branches lead to an increase in CIC.
- Deposits made by Deposit Money Banks at CBN branches result in a decrease in CIC.
Accuracy and Reconciliation:
- The CBN maintains a robust reconciliation/call-over system to identify and resolve any erroneous or non-impacted postings in the CIC account.
- This system ensures that reported CIC figures are accurate and free from significant errors.
Conclusion: The surge in Currency in Circulation underscores a notable increase in cash transactions within the Nigerian economy. The CBN’s meticulous tracking and reconciliation processes contribute to the accuracy of reported figures, ensuring transparency and reliability in monetary data. This development reflects the ongoing dynamics in Nigeria’s financial landscape.