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Nigerians, banks in possession of N2.39trn banknotes

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CIC

The general public and deposit money banks (DMBs) in Nigeria have in their custodies a total sum of N2.39 trillion that constituted currency-in-circulation (CIC) in the country as at July ending.

As additional N95.13 billion found its way into to the market, total currency in circulation (CIC) increased to N2.39 trillion in last month, rising from N2.29 trillion in June, 2020.

According to the latest statistics obtained from the Central Bank of Nigerian (CBN), CIC, which stood at N2.3 trillion in April, rose slightly to N2.35 trillion at the end of May.

The July report entitled ‘Currency-in-Circulation and Deposits at the CBN,’ also showed that CIC fell by six per cent to N2.29 trillion at the end of March 2020, against a decline of 7.5 per cent at the end of the fourth quarter of 2019.

Relative to the fourth quarter of 2019, the figures showed a contrast with the growth of 21.8 per cent.

The report said, “The development, relative to the level in the preceding quarter, reflected mainly the decline in currency outside depository corporations and the fall in vault cash, owing to the increase in Cash Reserve Ratio by the bank.

“The monetary authority’s liabilities to other depository corporations grew by 26.1 per cent to N7.85 trillion at end-March 2020, against the growth of 24.7 per cent and 23.6 per cent in Q4 2019 and Q1 2020 respectively. The development reflected the increase in CRR by the CBN.”

It added that reserve money grew by 17.1 per cent to N10.14tn at the end of March, compared with the growth of 23.9 per cent and 13.5 per cent in the Q4 2019 and the Q1 2020 respectively.

The ape bank said the development reflected mainly the 3.7 per cent growth in net foreign assets on the assets side and 26.1 per cent growth in total banks’ reserves on the liabilities side.

CIC 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 in the vaults of the Deposit Money Banks (DMBs), according to the apex bank.

The CBN stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the CIC in Nigeria, an approach that involved tracking the movements in CIC on a transaction by transaction basis.

It said for every withdrawal made by a DMB at one of the CBN’s branches, an increase in CIC was recorded, while for every deposit made by a DMB at one of the CBN’s branches, a decrease was recorded.

The transactions are all recorded in the CBN’s account, and the balance on the account at any point in time represents the country’s CIC.

According to the apex bank, analysis of the currency in circulation showed that a large and increasing proportion of the naira outside the commercial banking system was held by the general public who hoard a lot of the new banknotes.

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