In an effort to ease the cash crunch in Nigeria, the Central Bank injected N701 billion into circulation in March 2023, resulting in a 71.4% increase in currency in circulation compared to the previous month.
This surge in circulating currency is likely due to the Supreme Court’s decision to return old notes back into circulation, following a case brought to court by state governors who were against the policy.
Despite the contractionary measures adopted by the Central Bank, including raising the monetary policy rate and implementing a naira redesign policy, the cash crunch persisted due to the inability of the banking system to onboard the massive influx of mobile users and reports of account hacks and fake alerts.
As a result, the Supreme Court ruled to bring back old notes, resulting in a surge in the amount of cash in the system.
Nigeria’s money supply also rose to a record high of N54.6 trillion in March 2023, with credit to the private sector increasing and credit to the government dropping.
