The general downward movement in the level of money supply which characterised the first quarter of 1987 continued into the second quarter, the latest Central Bank of Nigeria, CBN, report just released I Lagos shown.
At the end of June, the stock of money stood at N11.9 billion reflecting a 2.4 per cent decline, or N287.9 million compared to the preceding month’s level.\
The figure also represents 6.2 per cent decline, or N794.2 million, compared to the level of money in circulation six months earlier.
According to the CBN, the contractionary actors of money supply were attributed to the fall in the level of bank credit to the domestic economy as well s the foreign assets of the banking system.
Increase in quasi money supply also affected the decline, says the CBN report.
Aggregate bank credit to the domestic economy standing at N30.4 billion during the period in review, fell by N217.9 million to the may level.
The CBN says claims on the government sector accounted solely for the decline, adding that the decline in bank credit to government reflected the sharp fall in CBN’s claims as the commercial bank’s claims increased.
It says credit to the private sector rose by 2.5 per cent during the month and commercial banks accounted for 95.8 per cent of the increase.
Foreign assets of the banking system declined further by N380.1 million to N4.2 billion reflecting falls both in the CBN and commercial bank’s holdings.
Currency in circulation in June also declined by N19.8 million in contrast to the preceding month and corresponding period of year earlier.
