Currency in circulation in the country dropped by N50bn to N2.78tn in February from N2.83tn as of January, the latest figures obtained from the Central Bank of Nigeria showed on Thursday.
The CBN disclosed that the currency in circulation dropped by N70bn in January from N2.9tn as of December 2020.
According to the CBN, currency in circulation rose from N2.5tn as of the end of October to N2.66tn in November.
The CBN defined the currency in circulation 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.