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Concern as CIC drops by N7.51bn, 133 days to old naira deadline

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2 years ago

FOLLOWING the N7.51 billion decrease in the currency-in-circulation (CIC), analysts have raised concern that about 133 days left for the newly designed naira notes to replace the old notes, currency-in-circulation has experienced major drop in five months.

This is even as the quantity of the new notes in circulation remained insufficient.

This decline in both series, the first since February 2023, has prompted analysts to caution that while the decrease in currency outside banks and currency-in-circulation might suggest a withdrawal of old banknotes, the introduction of the eagerly anticipated new naira notes is crucial to ensure a seamless transition.

The total amount of currency in circulation in the country dropped from N2.6 trillion as of the end of June 2023 to N2.59 trillion as of the end of July 2023.

Figures obtained from the Money and Credit Statistics recently released by the Central Bank of Nigeria (CBN) showed this represents a drop of N7.51 billion in one month.

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 in 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 approach involved tracking the movements of currency in circulation on a transaction-by-transaction basis.

It said for every withdrawal made by a DMB at one of CBN branches, an increase in the CIC is recorded, adding that for every deposit made by a DMB at one of CBN branches, a decrease in the CIC is also 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.

Prior to January 2023, the total amount of currency-in-circulation in the country dropped from N3.29 trillion as of the end of October 2022 to N1.38 trillion as of the end of January 2023 as a result of the naira redesign policy of the CBN.

Figures obtained from the CBN showed this represents a drop of N1.91 trillion in the three-month period.

The suspended governor of CBN, Godwin Emefiele, had, in October 2022, announced plans to redesign the old N200, N500 and N1,000 notes.

Emefiele also announced deadlines for Nigerians to swap their old naira notes with the new notes.

Emefiele had decried the challenges associated with currency management, including significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency-in-circulation was outside the vaults of commercial banks

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