CBN News Update On Naira Notes Today Friday 5th May 2023

CBN injects N701b into circulation to ease scarcity

In March, the Central Bank of Nigeria (CBN) injected N701.4 billion back into circulation, resulting in a significant increase in currency in circulation to N1.68 trillion. This represents a month-on-month (MoM) rise of 71.4% from N982.1 billion in February. According to CBN figures, this injection of cash helped reverse the downward trend that had seen currency in circulation fall to a 14-year low in February.

The increase in cash supply was due to a Supreme Court ruling ordering the CBN to continue using old banknotes in circulation until December 31, following a lawsuit filed by some governors against the implementation of the naira redesign policy.

CBN Speaks on Plans for New Naira Notes as Banks, Nigerians Complain of Scarcity

CBN Clarifies: No Plans to Phase Out Redesigned Naira Notes, Despite Reports of Scarcity

The Central Bank of Nigeria (CBN) has issued a statement to refute reports that it plans to withdraw the newly redesigned N200, N500, and N1,000 notes from circulation. The apex bank’s clarification comes amid rising concerns about the apparent disappearance of the new notes, which have led to speculation and complaints from bank customers.

The Redesigned and Old Notes Will Continue to Be Accepted as Legal Tender

Abdulmumim emphasized that the CBN remained committed to supplying the approved indent for the smooth running of the economy. He urged members of the public to disregard any report suggesting a phase-out of the redesigned currency and stated that the redesigned and old notes would continue to be accepted as legal tender. These notes would circulate side-by-side for transactions until December 31, 2023, when the old N1000, N500, and N200 banknotes would eventually be phased out.

Bank Customers Lament Over Counter Payment With Only Old Naira Notes

In an earlier report by GoldenNewsNg, bank customers lamented being paid over the counter with only old naira notes. This has led to concerns about the availability of the new notes in circulation. However, the CBN has reassured the public that the new notes are still in circulation and will continue to be so.

CBN pumps N701 billion back into circulation in March 2023 to ease cash at ATMs

In March 2023, Nigeria witnessed a 71.4% increase in its currency in circulation, reaching N1.68 trillion, compared to N982.1 billion recorded in the previous month, indicating an additional N701.4 billion added to the circulation. This information was tracked by Nairalytics from the Central Bank of Nigeria’s website. The surge in circulating currency is likely due to the Supreme Court’s judgment to reintroduce old notes into circulation, following a case brought to court by state governors who opposed the policy. Furthermore, currency outside the banking system also increased to N1.44 trillion from N843.3 billion, representing a 71.4% increase in one month, with about 86% of the circulating currency outside the banking system.

Despite the central bank’s adoption of contractionary measures, including raising the monetary policy rate by 650 basis points, from 11.5% to 18% per annum, between May 2022 and March 2023, to tame rising inflationary pressures in the country, the circulating currency continued to increase. The CBN’s approach included interest rate hikes, naira redesign, and encouraging a cashless policy to mop up excess liquidity from the economy. However, intense cash crunch and high costs of goods and services led to the failure of the naira redesign policy, triggering a massive cash scarcity.

As a result, the Supreme Court ruled to bring back old notes, leading to a surge in the amount of cash in the system. Nigeria’s money supply also rose to a record high of N54.6 trillion in March 2023 from N53.3 trillion recorded in the previous month. This was due to the increase in both components that make up the money supply (M3), Net Foreign Assets (NFA), and Net Domestic Assets (NDA). Credit to the private sector increased to N43.1 trillion, while credit to the government dropped to N27.5 trillion recorded in the previous month.