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Currency in Circulation Falls to N493bn - CBN

Posted by By Ayodele Aminu and Linda Elueme on 2005/08/10 | Views: 416 |

Currency in Circulation Falls to N493bn - CBN

The Central Bank of Nigeria (CBN) has said the total volume of currency in circulation fell by 0.4 per cent or N2.2 billion, from N495.6 billion last May, to N493.4 billion in June.

The Central Bank of Nigeria (CBN) has said the total volume of currency in circulation fell by 0.4 per cent or N2.2 billion, from N495.6 billion last May, to N493.4 billion in June.

It also put the volume of currency-in-circulation in the country at 3.99 billion pieces as at December, 2004. This figure represents 51.3 percent decrease from the 8.2 billion pieces recorded in 2002.

The CBN in its June 2005 monthly report, attributed the drop in currency during the period to the decline of N3.8 billion or 0.9 per cent in currency outside the banking system.

On the other hand, vault cash, the apex bank noted, increased by some N1.5 billion or 2.0 per cent in the review period.

“Total deposits at the CBN amounted to N876.9 billion, indicating an increase of N99.2 billion or 12.8 per cent over the level in the preceding month. The rise in the review period was attributable to the increases in deposit money bank’s and Federal Government’s deposits by N31.4 billion or 8.7 per cent, respectively.

“The shares of the three components in total deposits at the CBN, namely, Federal Government, bankers and ‘others’ were 45.0, 34.2 and 20.8 per cent, in May, 2005,” the report added.

Available data, according to the report, indicated a general decline in banks’ deposit and lending rates in June 2005.

“Average savings rate declined by 0.04 percentage points to 4.03 per cent, while all the rates on deposits of the other maturities fell from a range of 5.14 – 11.02 per cent in June 2005. Similarly, the average prime and maximum lending rates declined by 0.30 and 0.21 percentage points to 17.80 and 19.17 per cent, respectively.

“The spread between the weighted average deposits and maximum lending rates, however, widened from 10.92 percentages points in May to 11.35 percentage points in June 2005,” the report said.

It further noted that the margin between the average savings deposit and maximum lending rates which stood at 15.31 percentage points in May 2005, on the other hand, narrowed to 15.14 percentage points in the review month.
“The average inter-bank call rate, which stood at 7.27 per cent in May, rose to 5.48 per cent in June, 2005, reflecting tight inter-bank funds market conditions,” the apex bank stated.

The report noted that aggregate banking credit (net) to the domestic economy increased by N54.7 billion or 2.7 per cent over the preceding month’s level. The development reflected the rise in net loans and advances during the review month, it added.

“Central Bank’s credit to the DMB’s fell by 0.5 per cent to N60.4 billion in June 2005, reflecting the decline in deposit money bank’s overdrawn position with CBN. Total specified liquid assets of deposit money banks stood at N1, 250.5 billion, representing 51.1 per cent of their total current liabilities,” the CBN stated.

In a related development, CBN Governor, Prof. Charles Soludo stated yesterday that the volume of currency-in-circulation in the country stood at 3.99 billion pieces as at December, 2004.

He made this known in Lagos at a seminar on 'Cash Handling, Automation and Management' organised by Financial Institute Training Centre (FITC) in collaboration with CBN.

In his keynote address, Soludo who was represented by his Special Adviser, Dr. Chidozie Emenoga attributed the decline in currency to the on-going reforms in the financial sector.

Emenoga also reiterated CBN's plan to outsource its currency distribution and processing functions to private investors. This it said will free the CBN from routine operational activities in currency management and enable it focus more on its core functions.

He urged private investors to explore opportunities in both cash-in-transit services and currency processing operations noting that so far, the enquiries received in respect of the requirements and modalities in cash-in-transit operations has continued to be on the increase.

As part of the restructuring in the financial sector, he said CBN has taken over the management of the Nigerian Security Printing and Minting (NSPM) Plc with the aim of restructuring and repositioning the company into a world-class competitive firm.

The goal, he said is to stop the importation of finished bank notes within three years and sufficiently meet the security printing requirements of the Nigerian economy and those of West and Central Africa region in the long-term.
He stated that once the company stabilises and becomes profitable, the CBN will divest its interest to private sectors to manage.

He listed the problems of currency management which necessitated the on-going reforms to include; dirty notes in circulation, predominance of cash based transactions, low level of automation and near absence of private sector participation in currency management.

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Comments (3)

Abieyuwa(Edo, Nigeria)says...

Otasowie means evening life is better than morning life. There is an error in your “evening life is better than evening life”?

Naija g(Houston, Minnesota, US)says...

Sokari doesn’t mean joy. Joy is Biobela. Go to the village and ask the meaning of the name.

Fay(Katy, Texas, US)says...

Actually translates to bravehearted.