Figures obtained from the Central Bank of Nigeria have revealed that banks’ demand deposits rose by N1.1tn in three months to N16.89tn as of the end of March.
According to the CBN, the figure, which was N15.81tn as of the end of January, rose to N16.17tn as of the end of February.
The CBN also disclosed that currency in circulation fell by N42.43bn between January and March.
The apex bank stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This approach involves tracking the movements in currency in circulation on a transaction-by-transaction basis.
It said for every withdrawal made by a DMB at one of CBN’s branches, an increase in the CIC was recorded, adding that for every deposit made by a DMB at one of CBN’s branches, a decrease in the CIC was recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.
According to the apex bank, analysis of the currency in circulation showed that a large and increasing proportion of the Nigerian currency outside the commercial banking system was held by the general public hoarding a lot of the new banknotes.
