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Cash Outside Banks Increases M-on-M Amidst Scarcity

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CEM REPORT, FINANCE | Currency outside the banking system increase by N51.13 billion to N843.3 billion in February 2023 from N792.18 billion in January 2023.

The Central Bank of Nigeria (CBN) in its “money and credit” statistics posted on its website, the reported N842.3 billion is the lowest since 2010 and it is coming on the backdrop of CBN’s old currency swap policy.

The CBN’s statistics showed that currency outside banks dropped by 69.04 per cent in its YoY performance from N2.72 trillion in February 2022 to N842.3 billion in February 2023.


Although, currency outside the banks fell sharply by 67.2 per cent from N2.57 trillion as of December 2022 to N843.3 billion in February 2023.

This shows that cash flow in the country has increased amidst severe cash scarcity.

The CBN governor, Godwin Emefiele at the second Monetary Policy Committee meeting in Abuja, noted that the naira redesign and cash withdrawal limit policies have resulted in a sizeable reduction in currency-outside banks, indicating an expected improvement in the potency of monetary policy tools.

Meanwhile, the report also details that Nigeria’s money supply (M3) supply increased marginally by 0.3% from N53.14 trillion in February 2023.

This represents a 2.2% increase year to date from N52.16 trillion recorded at the beginning of the year.

According to the CBN during the MPC briefing last week, the increase in the nation’s broad money supply was largely due to the increase in CBN’s foreign asset holdings and the decline in foreign claims.

“Broad money supply (M3) grew by 13.14% (annualized) in February 2023 (year-to-date), below the 2023 provisional annual benchmark of 17.18%.”

“This was driven largely by the growth in Net Foreign Assets (NFA), which was attributed to the increase in foreign asset holdings of the Central bank and decrease in foreign claims on Other Depository Corporations (ODCs),” Emefiele said.

The CBN data also revealed that net foreign assets increased by 29.3% in two months from N4.25 trillion recorded as of December 2022 to N5.49 trillion as of the end of February 2023.

Inversely, net domestic assets declined marginally by 0.2% to N47.8 trillion in the same period.

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