Currency in Circulation Jumps 56% to N2.5trn, Currency Outside Banks Now N2.1trn

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By Adedapo Adesanya

Data from the Central Bank of Nigeria (CBN) has revealed that the currency in circulation (CIC) reached a year high of N2.5 trillion in May 2023, a 56 per cent jump from N1.6 trillion in March when a policy on new Naira notes was reversed.

The CIC comprises the currency outside the banking system and the vault cash of banks.

The total money supply in the country, however, fell slightly for the first time since July 2022 to N55.5 trillion, a slight difference compared to N55.6 trillion in April 2023.

Meanwhile, currency outside banks also rose to N2.1 trillion in May from N2 trillion at the end of April 2023.

On March 3, the Supreme Court ruled that old banknotes (N200, N500, and N1,000) remains legal tender until the end of the year.

Justice Emmanuel Agim said the correct process had not been followed.

“The directive given by President is invalid. Such directive is not just handed down after personal conversation with the governor of CBN (Central Bank of Nigeria),” he said.

The court also berated then-President Muhammadu Buhari for not obeying a previous provisional order to halt the policy until it decided the case. It said there was nothing to show that President Buhari’s directive for the release of old 200 naira notes until 10 April was implemented.

This culminated in the end of a short battle over a controversial monetary policy that saw the CBN last year introduce newly redesigned 200, N500, and N1,000 notes with tight deadlines to mop up the old notes from circulation.

The policy led to the scarcity of currency notes, bringing untold hardship to millions of citizens in an economy significantly driven by the informal sector with a large proportion of unbanked persons.

However, since the CBN announced that the notes were once again legal on March 13, currency in circulation in Nigeria has been on the rise.

Currency in circulation rose 71 per cent to N1.6 trillion in March from N982 billion in February 2023 and 41 per cent from March to N2.3 trillion in April 2023.

Currency outside banks has also risen in a similar trend growing by 71 per cent and 44 per cent month on month in March and April 2023, respectively.

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