The country’s currency in circulation saw a decline from N2.6tn at the end of June 2023 to N2.59tn by July 2023’s conclusion. This marked the first decrease since February 2023, with a one-month drop of N7.51bn, as per data from the Central Bank of Nigeria (CBN).
Currency in circulation refers to all legal tender outside the CBN’s vaults, encompassing the funds held by the public and within the vaults of Deposit Money Banks.
The CBN calculates currency in circulation using the “accounting/statistical/withdrawals and deposits approach”, tracking every currency movement. Any withdrawal or deposit made by a Deposit Money Bank at a CBN branch either increases or decreases the currency in circulation, respectively. These transactions are monitored via the CBN’s CIC account, indicating the nation’s circulating currency at any given time.
A significant drop was also noted before January 2023, when currency in circulation plummeted from N3.29tn in October 2022 to N1.38tn by January 2023. This was due to the CBN’s naira redesign policy, resulting in a three-month decrease of N1.91tn.
In October 2022, the then CBN Governor, Godwin Emefiele, introduced the redesign of the N200, N500, and N1,000 banknotes, setting deadlines for the public to exchange old notes for new ones. He urged banks to return old denominations to the CBN and informed the public to deposit old notes to access the new ones upon release.
Emefiele highlighted challenges in currency management, pointing out that over 80% of the circulating currency was hoarded outside commercial bank vaults.