Currency-In-Circulation Dropped To N1.54tr – CBN | Independent Newspapers Limited
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Currency-In-Circulation Dropped To N1.54tr – CBN

Posted: Sep 28, 2015 at 12:01 am   /   by   /   comments (0)

By Sola Alabadan, Lagos

Latest data on the website of the Central Bank of Nigeria (CBN) revealed on Sunday that currency-in-circulation fell by N264.68 billion from N1.808 trillion on March 31, 2015 to N 1.544 trillion on August 31, 2015.

CBNAccording to the CBN, currency-in-circulation stood at N 1.548 trillion on September 30, 2014 increased to N 1.797 trillion on December 31, 2014.

The figure, however, fell to N 1.661 trillion January 31, 2015 before reducing further to N 1.622 trillion on February 28, 2015.

So far this year, currency-in-circulation attained its peak of N 1.808 trillion in the month of March, as it dropped to N 1.692 trillion on April 30, 2015 and N 1.562 trillion on June 30, 2015.

The drop in currency circulating outside the banks, when compared with previous month’s, however came at a time when the CBN’s Monetary Policy Committee (MPC) was yet to reduce the Cash Reserve Ratio (CRR) on government deposits from 30 to 25 per cent.

The CRR is the percentage of deposits banks must keep with the CBN as reserves.

Rising from its meeting on September 22, the third this year, members of the MPC, chaired by Godwin Emefielfe, the CBN Governor, voted by absolute majority to reduce the CRR to 25 percent in order to ease liquidity shortages.

This means that for every N1000 fixed deposited by an individual or company in any bank, for example, the bank is expected to warehouse N250.00 at the CBN, just as a government Ministry, Department or Agency (MDA) would.

Although the reduction in CRR was not up to what financial and economic experts in the country expected, the analysts had pointed out that a reduction in the CRR of public and private sector deposits from 31 per cent to between 15 and 26 per cent would neutralise the effects of the Treasury Single Account (TSA), whose implementation as directed by the Federal Government, began on September 15.

While seven of the 10 members of MPC voted in favour of reduction in the CRR from 31 percent to 25 percent, all the members unanimously agreed to retain  the  MPR at  13 percent , as well as retain the symmetric  corridor around the  MPR at 200bps and retain  the  Liquidity Ratio  (LR) at  30 percent. The meeting is the fifth for the year 2015.