Nigeria’s currency in circulation, which hit N2.60 trillion in June, might comprised N400 billion new notes and N2.2 trillion old bank notes.
Currency in circulation (CIC) is the amount of cash in paper notes or coins issued by the apex bank.
According to the latest data from the Central Bank of Nigeria (CBN), CIC rose by 88 per cent from N1.39 trillion in January to N2.60 trillion in June.
Former member, Presidential Economic Advisory Council, Bismarck Rewane said the Central Bank of Nigeria (CBN) printed N400 billion new notes following the currency redesign programme.
In a report entitled: Nigeria Hits A Brick Wall, he said three of the eight denominations – N200, N500 and N1,000 – make up 90 per cent total cash in circulation.
According to him, reduction in the velocity of money will lower output in the informal sector.
“The informal sector accounts for 30 per cent of formal GDP. It employs over 80 per cent of the total population. Transactions are mainly settled in cash and Point of Sale (PoS). There is a linkage between the informal and formal economy,” he said.
He said the Federal Government, with the best intentions, decided to redesign the naira at the most inauspicious time.
CBN data showed that the amount of currency in circulation in Nigeria fluctuated in the first half of 2023. In January, it stood at N1.39 trillion and fell to N982,097 billion in February.
However, currency circulation rose to N1.68 trillion in March. In April, May, and June, it increased to N2.48 trillion, N2.53 trillion, and N2.60 trillion, respectively.
In October 2022, the CBN announced naira redesigning policy which saw N200, N500, and N1000 notes redesigned.
The new notes have been circulating since December 15, 2022.
The CBN said it decided to redesign the banknotes because of concerns about the management of currency in circulation, particularly those outside the banking system.
The CBN said currency management has faced several challenges in recent years, including counterfeiting, the use of cash for illegal activities, and the hoarding of banknotes by members of the public.
At the time policy was introduced, the bank explained that over 80 percent of the currency in circulation was outside the vaults of commercial banks. However, the policy was met with widespread disapproval by Nigerians.