The Central Bank of Nigeria (CBN) reports an increase of N890 billion in currency in circulation (CIC) between September 2023 and December 2023.
This surge, observed during Governor Cardoso’s first three months in office, brings the total CIC to N3.65 trillion in December, marking a substantial 32% rise from the N2.76 trillion recorded in September.
Amidst this spike in currency circulation, an intriguing revelation surfaces – 94% of the CIC remains hoarded by Nigerians outside the banking system. The CBN data discloses that non-bank-held cash witnessed a 42% surge, soaring from N2.42 trillion in September 2023 to N3.43 trillion in December 2023.
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This revelation aligns with the backdrop of widespread reports on cash scarcity plaguing banks, ATMs, Points of Sale, and Bureaux de Change (BDCs) across major cities in Nigeria. Despite the CBN’s reassurances and its attribution of scarcity to hoarding, concerns intensify over the adequacy of currency within the banking system.
The CBN’s decision to extend the deadline for the legal tender status of old N200, N500, and N1000 notes until further notice suggests a shift in strategy. This move, coupled with the removal of the deadline for the redesign of banknotes, indicates a departure from the currency scarcity crisis faced earlier in the year.
The earlier naira redesign policy had significantly reduced the country’s currency supply, dropping from N3.29 trillion in October 2022 to N1.38 trillion by January 2023.
Despite these measures, the latest surge in CIC prompts concerns about the effectiveness of the CBN’s efforts to control inflation, which soared to 28.92% in December 2023.
The behavioral pattern emerging from this trend, with more Nigerians choosing to hoard cash, poses a potential obstacle to the central bank’s inflation-curbing strategies.
As Nigeria grapples with the economic implications of this surge in currency circulation, Governor Cardoso’s tenure at the CBN takes center stage in navigating the country through the delicate balance between liquidity and inflation control.