The Central Bank of Nigeria issued a staggering N2.405 trillion in currency over six months, addressing a cash shortage that had affected Nigerians, especially during festive periods and for small businesses reliant on cash transactions. Despite assurances of sufficient currency in early November 2023, the banknotes surged to N2.4 trillion by June 2023.
This increase was substantial, marking over a 100% rise from the corresponding period in 2022. The eNaira constituted less than half a percent of this issuance, with banknotes dominating over 99%. The CBN, aiming to bolster the currency’s integrity, announced plans to employ advanced technology for counterfeit note examination.
Factors like government spending, economic growth, and shifts in monetary policy were cited as potential contributors to the rise in circulating currency. The expansion of broad money supply (M3) surpassed expectations, driven by a surge in net foreign assets following the shift to a market-determined exchange rate in mid-2023.
The bank’s actions led to significant changes in the composition of its claims on the central government, impacting securities, shares, and loans. Keeping the CBN’s financial operations within statutory limits was emphasized to prevent adverse effects on the macroeconomic landscape, drawing from prior experiences that should be avoided.