Figures obtained from the Central Bank of Nigeria have revealed that the currency in circulation fell by N42.43bn between January and March.
The CBN disclosed in its data that the currencies, which stood at N3.29tn as of the end of January, fell to N3.25tn by the end of March.
It recently warned Deposit Money Banks against accepting mutilated naira notes, explaining that they were not the real currencies in circulation.
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 the vaults of the Deposit Money Banks, according to the apex bank.
The CBN stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This entails tracking the movements in currency in circulation on a transaction-by-transaction basis.
It explained that 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 hoarding a lot of the new banknotes.
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