The currency in circulation in Nigeria fell dramatically, dropping by 235.03 % to N982.09 billion at the end of February from N3.29 trillion at the end of October 2022. This decline resulted from the Central Bank of Nigeria’s (CBN) naira redesign policy, which removed N2.3 trillion from circulation during the review period. The CBN’s figures show that currency in circulation moved from N3.16 trillion to N3.29 trillion in November 2022, then to N1.38 trillion in December 2022 and January 2023, respectively.
In October 2022, CBN Governor Godwin Emefiele announced plans to redesign the old N200, N500 and N1,000 notes and set deadlines for Nigerians to exchange their old notes for the new ones. He highlighted several challenges in currency management, including the hoarding of banknotes by the public—over 80 % of currency in circulation was outside commercial‑bank vaults. Other issues included a shortage of clean, fit notes, a negative perception of the CBN, heightened risk to financial stability, and an increased ease of counterfeiting, especially of the higher‑denomination N500 and N1,000 notes, which have seen a sharp rise in counterfeit incidents in recent years.
When the deadline for the old notes expired, a scarcity of new naira notes caused hardship for Nigerians. President Major General Muhammadu Buhari (retd) therefore approved the continued use of the old N200 note as legal tender until April 10. After several state governments sued the federal government over the redesign policy, the Supreme Court, on March 3, extended the legal‑tender status of the old N200, N500 and N1,000 notes to December 31. Ten days later, the CBN officially instructed commercial banks to comply with the court’s ruling.
The CBN defines currency in circulation as all legal‑tender money held by the public and in the vaults of Deposit Money Banks, i.e., currency outside the central bank’s vaults. To compute this figure, the bank used an “accounting/statistical/withdrawals and deposits” approach, tracking each transaction: every withdrawal by a DMB at a CBN branch increased the CIC (currency‑in‑circulation) balance, while every deposit decreased it. These transactions are recorded in the CBN’s CIC account, and the account balance at any given time represents the nation’s total currency in circulation. Analysis of the data revealed that a large and growing share of naira outside the commercial banking system is being hoarded by the public, particularly the newly issued banknotes.
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