According to figures from the CBN, the figure dropped by N50bn in February from N2.83tn as of January to N2.78tn as of the end of February.
It had earlier dropped by N70bn in January from N2.9tn as of December 2020.
According to the CBN, currency in circulation rose from N2.5tn as of the end of October to N2.66tn in November.
The CBN defined currency in circulation as currency outside the vaults of the apex bank; that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks.
The apex bank stated that it employed the “accounting/statistical/withdrawals & deposits approach” to compute the currency in circulation in Nigeria.
This approach involved tracking the movements in currency in circulation on a transaction by transaction basis.
The transactions were all recorded in the CBN’s CIC account, and the balance on the account at any point in time represented the country’s currency in circulation.
According to the apex bank, analysis of the currency in circulation showed that a large and increasing proportion of the Nigerian Naira outside the commercial banking system was held by the general public who hoard a lot of the new banknotes.
The CBN also disclosed that broad money supply (M3) declined in January 2021 due, largely, to the fall in net domestic assets of depository corporations, which more than offset the growth in net foreign assets.
As a result of the growth in net foreign assets of the CBN which outweighed the decline in that of other depository corporations, it stated, net foreign assets of the banking system grew by 1.3 per cent to N7.22tn at the end of January, compared with the growth of 20 per cent at the end of December 2020.