Currency-In-Circulation Dropped to N1.692tr In April – CBN | Independent Newspapers Limited
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Currency-In-Circulation Dropped to N1.692tr In April – CBN

Posted: May 29, 2015 at 12:20 am   /   by   /   comments (0)

By Bamidele Ogunwusi  –  Lagos


The nation’s apex bank, the Central Bank of Nigeria (CBN), on Thursday released figures for currency-in-circulation for the month of April. The figure shows that the total money outside of the nation’s banking industry stood at N1.692 trillion.

Godwin Emefiele, CBN Governor

Godwin Emefiele, CBN Governor

An analysis of the April figure shows that it went by N116.315 billion or 6.4 percent, when compared with the N1.808 trillion recorded at the end of the preceding month of March.

On a year-on-year basis, the figure represented a N122.672 billion or 7.81 percent drop over the N1.569 trillion reported by the apex bank for April 2014.

The peak for currency in circulation in the year so far was in March when it stood at N1.808 trillion, while the April figure represents the second highest in the year after March figure.

However, experts are of the opinion that the recent decision by the CBN’s Monetary Policy Committee (MPC)  to harmonise the Cash Reserve Ratio for the public and private sectors to 31 per cent will further shrink  the currency in circulation.

Rising from its regular meeting, the third this year, members of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) , voted by absolute majority to harmonise the Cash Reserve Ratio for the public and private sectors to 31 per cent.

Before then, private sector deposited attracted CRR of 25 per cent, while the public or government sector’s was 75 per cent.

Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.

This means that for every N1000 fixed deposited by an individual or company in any bank, for example, the bank is expected to warehouse N310.00 at the CBN, just as a government Ministry, Department or Agency (MDA) would.

Before the MPC’s decision, N750.00 of federal and state MDAs’ N1000 fixed deposits would have been quarantined at the apex bank.

In arriving at the decision, members of the MPC noted, according to the communiqué issued at the end of their two-day meeting, “a harmonisation of the CRR was imperative to curb abuses and improve the efficacy of monetary policy”.

The communiqué, signed by Godwin Emefiele, CBN Governor and MPC chairman, added “that the current discriminatory CRR on public and private sector deposits has not only constrained the policy space, but could inspire moral hazard by private market participants”.