The Central Bank of Nigeria data report has revealed that banks’ demand deposits rose by N1.1tn in three months to N16.89tn as of the end of March.
According to the CBN, the figure rose from 15 trillion naira as of January to 16 trillion naira as 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.
The CBN also disclosed that currency in circulation fell by N42.43bn between January and March
In its data on the currency, the currencies which stood at N3.29tn as of the end of January, fell to N3.25tn by the end of March.
It defined currency in circulation as currency outside the vaults of the central bank; that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks.
The CBN stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This approach involves tracking the movements in currency in circulation on a transaction-by-transaction basis.
The Apex bank added that 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.
CBN’s CIC account records all transactions, and the balance in the account represents the country’s currency in circulation at any given time.
Additionally, Nigeria’s currency analysis indicates that a large and increasing proportion of the currency is held by the general public outside commercial banks, who are hoarding both old and new banknotes.