According to the CBN, currency-in-circulation is defined as
currency outside the vaults of the central bank; that is, all legal tender
currencies in the hands of the public and in the vaults of the Deposit Money
Banks.
The currency in circulation in the country had dipped by a
235.03 per cent to N982.09bn at the end of February from N3.29tn at the end of
October 2022, on the back of the naira redesign policy of the CBN.
Figures obtained from the CBN revealed that N2.3tn was
mopped up from circulation during the period under review.
In a report by a research firm, Augusto&Co, titled
‘Redesign gone wrong? – Costly cashless’, while the policy was still on, it
stated that, “How does the Central Bank retrieve 84.5 per cent of a country’s
currency in circulation in just 90 days?
“This was one of the many questions seemingly begging for
answers when Nigeria’s apex bank announced its plan to redesign the three
higher value notes of the naira (N200, N500 and N1,000) on 25 October2022.”
A performance appraisal of the CBN’s execution of the
redesign project would range from grossly unprepared to poorly perceived, it
stated.
Speaking on the consequences during the implementation,
Augusto&Co said, “Public outrage has degenerated to violent protests in
some cities, with incidents of vandalism of several banks’ facilities – and PoS
outlets.
“The cash crunch and the uncertainty surrounding the policy
are fanning a long-simmering fire of public resentment, triggered by
deteriorating economic conditions and recently exacerbated by unending petrol
shortages.”
The hardest hit by the policy had been the most vulnerable
members of the population (the poor, the unbanked and the rural dwellers), the
report added.
It would be recalled that the Governor of the CBN, Godwin
Emefiele, had in October 2022, announced plans to redesign the old N200, N500
and N1,000 notes.
The governor decried the challenges associated with currency
management, including the hoarding of banknotes by members of the public, with
statistics showing that over 80 per cent of currency-in-circulation was outside
the vaults of commercial banks.
Due to hardships the policy subjected Nigerians to among
others, some state governments sued the Federal Government over the naira
redesign policy; the Supreme Court in its ruling on March 3 extended the legal
tender status of the old N200, N500, and N1,000 notes to December 31.
Ten days after the Supreme Court judgement, the CBN
officially ordered commercial banks to comply with the court verdict.