Currency outside the banking system grew in the fourth quarter of 2017, leading to 21.1 percent increase in currency in circulation to N2.2 trillion.
The Central Bank of Nigeria (CBN) disclosed this on Thursday in its economic report for the fourth quarter of 2017.
Despite the non-expansionary monetary policy stance of the CBN in the fourth quarter of 2017, growth in the major monetary aggregates trended upward. Net foreign assets and other asset (net) of the banking system rose by 47.4 per cent and 10.6 per cent above the levels in the preceding quarter, respectively, while aggregate credit to the domestic economy fell by 4.2 per cent, relative to the levels in the preceding quarter. Consequently, on quarter-on-quarter basis, broad money supply (M2), rose by 9.3 per cent to N24.01 trillion, in contrast to the 0.1 per cent decline at end- September 2017. Over the level at end-December 2016, M2 grew by 1.7 per cent due, wholly, to the 61.9 per cent growth in net foreign asset of the banking system, in contrast to the 6.9 per cent decline at the end of the preceding quarter.
On quarter-on-quarter basis, narrow money supply (M1), grew by 9.7 per cent to N11.1 Trillion at end-December 2017, in contrast to the 1.2 per cent decline at the end of the preceding quarter. The increase in M1, relative to the preceeding quarter, reflected the 24.2 per cent and 7.2 per cent rise in currency outside banks and demand deposits of the banking system, respectively. Over the level at end- December 2016, narrow money supply (M1), fell by 2.1 per cent, compared with the decline of 10.7 per cent at end- September 2017. The development reflected the 2.1 per cent apiece fall in its currency and demand deposit components.