The total amount of Deposit Money Banksâ€™ (DMBsâ€™) reserves with the Central Bank of Nigeria (CBN) stood at N3.7 trillion at the end of February, 2014, the central bank has said.
According to the latest central bank money and credit statistics for February, the amount represents a decrease of N116 billion, compared to the N3.816 trillion recorded in January 2014.
Bank reserves are DMBsâ€™ deposits with the central bank that are not to be lent out. It is held as part of risk management measures.
The amount is expected to rise further as a result of the Monetary Policy Committee (MPC) decision to raise the Cash Reserve Requirement (CRR) for private sector deposits to 15 per cent.
Data from the central bank as at December 2013 showed that out of the N7 trillion available funds, private sector deposit represented approximately 53 per cent, translating to N3.7 trillion.
Applying the 300 basis points increase by the MPC means that about N111.1 billion would be quarantined from the financial system when the policy is implemented.
Meanwhile, the data showed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts declined further to N15.318 trillion as at February, from N15.465 trillion recorded in January.
On annualised basis, the drop in broad money translated to a contraction of 13.42 per cent as against a growth target of 15.52 per cent for fiscal 2014.
Also, 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 also fell from N6.754 trillion the previous month, to N6.663 trillion in the review month.
In addition, currency outside banks reduced from N1.333 trillion to N1.258 trillion in the month under review, while demand deposits which are funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution also reduced slightly to N5.375 trillion as at February, from the N5.420 trillion recorded in January.
But credit to the private sector increased slightly from N16.668 trillion, to N16.373 trillion. Net domestic credit grew marginally by 0.86 per cent in February 2014, translating to an annualised growth rate of 5.15 per cent.
The annualised growth in net domestic credit was significantly lower than the provisional benchmark of 28.5 per cent for fiscal 2014.
The sluggish growth in aggregate credit was traced mainly to the decline in Federal Government, borrowing which contracted by 2.02 per cent in February 2014 or 12.14 per cent on an annualised basis.
During the review period, money market interest rates remained within the Monetary Policy Rate corridor, oscillating in tandem with the level of liquidity in