By Kayode Tokede
The Central Bank of Nigeria (CBN) has said currency in circulation hit all-time high at N2.91 trillion in December 2020.
The reported data by CBN in December is however, 29.3 per cent and 9.4 per cent Year-on-Year and Month-on-Month growth respectively.
The CBN in a report had explained that, “The heightened uncertain outlook due to the lockdown encouraged more cash to be held by the public. This was evident from the increase in currency in circulation, compared with the level in the preceding month.”
The apex bank reported N2.66 trillion currency in circulation in November, the second highest in the year under review.
According to the apex bank, naira in circulation rose by three per cent to N2.497trillion in October from N2.39trillon reported in September 2020.
The data by CBN disclosed that currency in circulation was N2.369 trillion in August from N2.39 trillion in July 2020.
However, the data, showed that N2.29 trillion and N2.35trillion was currency in circulation in June and May respectively.
In the first quarter of 2020, our correspondent gathered that currency in circulation was hovering around an average of N2.2 trillion.
In April, it was N2.3 trillion and March, N2.29trillion.
Currency in circulation however, opened the year at N2.25trillion and closed February at N2.19trillion
The President, Bank Customers Association of Nigeria (BCAN), Dr Uju Ogubunka blamed informal sector for not embracing cashless policy of the CBN and infrastructures in rural areas to increasing currency in circulation in Nigeria.
According to him, “Nigeria will continue to have the experience of increasing currency in circulation until everyone are able to key into alternative means of transactions settlement beyond cash.
“It will take sustained awareness and necessary infrastructure put in place across the nation. There is need for rural areas to be captured in the cashless policy of the CBN.
“A lot of challenges facing cashless policy of the CBN. The policy introduced in 2002 is working but it will take some time to see the manifestation.”
The Chief economist/head of research at PAC research, Mr. Moses Ojo attributed the hike in currency in circulation to ember month spending and Loan to Deposit (LDR) policy of the CBN.
He said, “In an attempt to close the gap on the 65 per cent LDR, banks tend to put more currency in circulation. Despite all these efforts, most of the banks still couldn’t meet up with the benchmark.”
The Executive Vice Chairman, Highcap Securities, Mr. David Adonri, attributed the increase in currency in circulation to the December spending and Federal Government’s implementation of the 2020 budget with more funds released to finance key projects.
He said, “If the apex bank decided to buy financial instruments from authorised dealers. The CBN can pump money into the economy which can increase volume of physical currency in circulation.
“Also, If the banks are giving out loans and advances to their customers, it is expected to increase the currency in circulation.”