The Central Bank of Nigeria may have commenced the gradual withdrawal of old notes in a bid to curb the rise of inflation in the country as Currency in Circulation (CIC) is on the decline.
CIC is currency outside the vaults of the CBN, which includes all legal tender currency in the hands of the public and in the vaults of the Commercial Banks.
As of the end of June 2023, the total amount of currency in circulation in the country was N2.6trn but it dropped by N7.5bn to N2.595trn in July 2023, according to data published by the apex bank.
The decline may reflect the CBN’s fight to reduce the surging inflation in Africa’s biggest economy.
Inflation as of July hit 24.08 per cent according to official data released by the National Bureau of Statistics.
In the first Monetary Policy Committee meeting chaired by the acting governor of the Central Bank, Folashodun Shonubi, he hinted on plans to gradually withdraw old notes, especially the bad notes.
He said that there was an optimal level of currency out there, adding, “So, more of what is being done is a replacement to keep the level rather than just putting money out there.”
He disclosed that only old notes will be removed from the system because they are returned to the apex bank as not issuable.
Monetary Policy Rate rate was also raised to 18.75 per cent in July due to fears that a loosening could spike inflation.
The N7.51bn drop in the CIC is the first in five months since the CBN announced that the old N1000, N500, and N200 remains legal tender until December 31, 2023.
In January 2023, the total CIC in the country dropped from N3.29 trillion by N1.91 trillion to N1.38 trillion in October 2023 as a result of the naira redesign policy of the CBN.
