The currency in circulation rose by N418bn to N3.33tn as of December 31, 2021, from N2.91tn a year earlier, according to the Central Bank of Nigeria.
The CBN data showed that the currency in circulation increased by 19.06 per cent from N2.44tn at the end of December 2019.
In its report on currency operations, it said, â€œThe growth in CIC reflected the continued dominance of cash in the economy. Analysis of the CIC shows that a greater proportion was in higher denomination banknotes (N100, N200, N500 and N1000).
â€œThe higher denomination banknotes together accounted for 63.47 per cent and 98.08 per cent of the total CIC, in terms of volume and value, respectively.
â€œThe volume of lower denomination banknotes (N5, N10, N20, N50), accounted for 28.43 per cent of the total CIC and 1.92 per cent, in terms of value as at end-December 2020.â€
According to the CBN, electronic payment options were introduced with the major aim of reducing the amount of naira notes used for transactions, but not to eliminate cash usage.
It said cashless transactions via e-payments would help to increase convenience, provide more service options, reduce the risk of cash-related crimes, and provide cheaper access to (out-of-branch) banking services and access to credit.
The CBN defined the currency in circulation as currency outside the vaults of the central bank â€“ that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks.
The CBN said it employed the â€œaccounting/statistical/withdrawals & deposits approachâ€ to compute the currency in circulation in Nigeria.
It said this approach involved tracking the movements in currency in circulation on a transaction-by-transaction basis.
According to the CBN, for every withdrawal made by a Deposit Money Bank at one of CBNâ€™s branches, an increase in CIC is recorded; and for every deposit made by a DMB at one of CBNâ€™s branches, a decrease in CIC is recorded.
The transactions are all recorded in the CBNâ€™s CIC account, and the balance on the account at any point in time represented the countryâ€™s currency in circulation.