Huge cash transactions in the economy has continued to rise as currency in circulation rose to N2.35 trillion in May.
This was despite coronavirus-induced lockdown and lull in economic activities in the country over past months.
Statistics obtained from the Central Bank of Nigeria (CBN) on Monday showed that the figure, which stood at N2.29 trillion as of the end of March, rose to N2.3 trillion as atthe end of April.
The apex bank stated, “Currency in circulation at end-November 2019 rose by 9.9 per cent to N2.2 trillion, 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.
“Cash 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 (DMBs).”
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 physical money outside banks’ vaults.
According to the apex bank, analysis of the cash 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.
