Wednesday, 25 September 2013

Banks’ Deposits with CBN Rise to N2.8 Trillion

The total amount of Deposit Money Banks’ (DMBs’) reserves with the Central Bank of Nigeria (CBN) increased to N2.784 trillion in August.
The latest central bank’s money and credit statistics showed that the amount represents an increase by N367 billion or 15 per cent, compared to the N2.417 trillion recorded in July.
Bank reserves are deposits in accounts with the central bank that are not to be lent out. It is held as part of risk management measures.
The significant increase recorded in the month under review was as a result of the implementation of a 50 per cent Cash Reserve Requirement (CRR) for public sector deposits in August, which saw the withdrawal of over N1 trillion from the banking system.
The Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who described bank reserves as high-powered money, said the huge amount recorded in August would decline after some time.
“It is not depositors’ money; the increase was a result of the money that was taken out of the system. That is government’s funds and once they come for their money, it will reduce. If not for what was done, that money would be going after foreign exchange,” he explained.
Meanwhile, the CBN data showed that the currency-in-circulation declined marginally year-on-year to N1.443 trillion at the end of August, from N1.457 trillion in July.
In addition, it revealed that credit to the private sector increased year-on-year to N16.101 trillion in August, as against the N15.796 trillion it was as at July.
But just like the previous month, the Net Domestic Assets (NDA) reduced further year-on-year to N5.627 trillion in August, compared to the N5.904 trillion recorded in July, just as the Net Foreign Assets (NFA) increased to N8.992 trillion in August, from N8.908 trillion the previous month.
Nevertheless, broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts, fell further to N14.619 trillion in August, from N14.811 trillion as at July. Also, the central bank’s money and credit statistics showed that Narrow Money (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank, reduced to N6.271 trillion in the month under review, from N6.523 trillion in July.
According to the central bank, currency outside bank stood at N1.152 trillion as at August, while demand deposits was N5.118 trillion.
Source: ThisDayLive

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