The Central Bank of Nigeria (CBN) has revealed that demand deposits by deposit money banks rose by N1.1tn in three months to N16.89tn as of the end of March, 2022.
This shows an increase from N15.81tn as of the end of January, and N16.17tn as of the end of February.
A demand deposit account offers access to depositors’ money without requiring advance notice, by allowing the depositor to withdraw money on demand and as needed.
Data on the currency by the apex bank also showed that currency in circulation fell by N42.43bn between January and March.
Currency in circulation is currency outside the vaults of the central bank; money in the hands of the general public and in the vaults of the Deposit Money Banks.
The CBN said the currencies, which stood at N3.29tn as of the end of January, fell to N3.25tn by the end of March.
It further pointed out that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria, an approach which involved tracking the movements in currency in circulation on a transaction-by-transaction basis.
It said for every withdrawal made by a DMB at one of CBN’s branches, an increase in the CIC was recorded, adding that for every deposit made by a DMB at one of CBN’s branches, a decrease in the CIC was recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.
Further analysis of the currency in circulation showed that a large and increasing proportion of the Nigerian currency outside the commercial banking system was held by the general public hoarding a lot of the new banknotes.
