Naira Redesign Policy: Nigerians Add N1.67 Trillion to Demand Deposit in 3 Months
- Demand deposits in Nigerian banks have hit an all-time high of N20.18 trillion
- The amount is due to the naira swap of the CBN since it began the redesign policy
- A demand deposit is the money customers can withdraw without prior notice to banks
- Nigerians returned about N1.67 trillion to the banks between October 2022 and January 2023.
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Following the launch of the Central Bank of Nigeria (CBN)'s naira redesign policy in October 2022, the total amount of money in demand deposit has hit N20.18 trillion.
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An uptick in demand deposits
Demand deposits, money that could be withdrawn without prior notice, rose to an all-time high of N18.5 trillion at the end of October 2022, representing a growth of 9% in three months, a Guardian report said.
The amount dropped to N18.12 trillion in December due to Christmas spending, but by January 2023, demand deposits increased 9.2% month-on-month to more than N20 trillion, the highest ever held by Nigerian banks.
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Towards the end of January 2023, as the deadline for the return of old N200, N500, and N1,000 notes approached, Nigerians returned physical cash to banks, and savings rose by N4.37 trillion or by 27.6%.
As of January 2022, the total money in demand deposit accounts in banks' vaults was N15.8 trillion.
Money outside banks declines
Analysis reveals a decline in currency outside banks. In January, the volume of cash outside banks was about N788.9 billion, representing 30% of the N2.71 trillion recorded three months earlier.
Since 2011, the currency in circulation has remained above N1 trillion.
The CBN said one of the reasons it embarked on the naira redesign policy is to reduce the amount of excess money outside the banking system.
CBN Governor, Godwin Emefiele, said the high volume of money held outside banks had crippled the ability of the financial system to create credits.
Credit to the private sector has remained slow, at an average of 1% in the last three months.
However, reports say there has been an upsurge in the short-term credit flow from commercial banks to the CBN since the beginning of the year, a reversal of historical figures, suggesting that commercial banks are now replete with idle funds.
CBN mops Up N2.09 trillion in 4 months as cash scarcity persists
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) had shrunk the currency in circulation from N3.29 trillion as of October 2022 to N1.38 trillion by January 2023 as it embarks on the demonetisation of the economy with the naira redesign policy.
According to data obtained from the apex bank, this represents a drop of N1.91 trillion in three months.
The move is due to the naira redesign plans of the CBN announced by Godwin Emefiele in October last year.
Source: Legit.ng
