Currency in circulation drops to N3.01trn in 2022 over CBN’s tightening policy

Amid its tightening polices on the inflation rate and strengthening the local currency against other currencies, the Central Bank of Nigeria (CBN) has revealed that currency in circulation dropped to N3.01trillion in December 2022 from N3.33trillion in December 2021.

The latest CBN “money and credit statistics” revealed that currency in circulation dropped by 9.42per cent or N313.1 billion Year-on-Year (YoY).

Analysts have attributed the decline in currency in circulation to CBN;s hike in the Monetary Policy Rate (MPR) and the introduction of new naira notes towards the end of 2022.

In 2022, the member of the Monetary Policy Council (MPC) of the CBN had voted to increase MPR four times to tackle rising inflation and strengthen the local currency at the foreign exchange market.

CBN Governor, Godwin Emefiele on December 15, 2022 disclosed plans to begin the circulation of new N1,000, N500 and N200 notes.

A check by Western Post revealed that currency in circulation dropped significantly between October 2022 to December 2022.

In October, currency in circulation was at N3.29trillion but it dropped to N3.16trillion in November 2022.

The CBN defined currency in circulation as currency outside the vaults of the apex 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 figures from the CBN, the currency in circulation has witnessed second consecutive decline since April when it hits all-time high over political spending, hike in inflation, among other factors.

The CBN’s statistics revealed that currency in circulation in April 2022 was at N3.35trillion from N3.25trillion in March.

Findings by Western Post revealed that currency in circulation dropped by N19.75billion or 0.59 per cent in April, the third highest decline last year.

The apex bank in January reported N3.28trillion currency in circulation and it dropped by N37.8billion or 1.15per cent to N3.25trillion in February 2022.

While defending its decision to redesign the Naira note, the apex bank had noted that some individuals were stockpiling huge amounts of cash outside the banking system with money and credit statistics revealing that currency outside banks hits the highest record of N2.57trillion in December from N2.78trillion in January 2022.

The CBN Governor in a statement said: “Significant hoarding of banknotes by members of the public, with statistics showing that over 85 per cent of currency in circulation are outside the vaults of commercial banks.

“To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public.

“Evidently, currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue.”