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Abstract
This study is set to ascertain the relationship between the use of e-payment products and the value of currency in circulation in Nigeria. An ex-post facto research design was adopted in the investigation. A least square regression analysis was carried out on a time-series data. The objective was to ascertain relationships between the variables, whether positive or negative and to determine its significance. The outcome of the study indicates that only REMITA and WEBPAY have an inverse but significant negative relationship with currency in circulation in Nigeria. At the same time, the use of ATM and POS maintained a positive and significant relationship. This isn’t surprising considering ATM and POS machines are verified sources of cash withdrawals in Nigeria. Presently, due to the relatively low use of e-payment products, their influence on monetary policy has been insignificant. The Central bank of Nigeria has not recorded a decrease in currency in circulation followed by an increase in the use of e-payment products; instead, it is recorded that between 2009 and 2018, the value of currency in circulation grew by about 97.18%. It is important to stress the fact that any innovation takes time to mature and become accepted in the market. It might be too soon to complain. We ought to expect that in the future, e-money products could be made more acceptable as regular payment instruments. Following this, their influence on monetary policy could be increased. This depends on the extent to which it will substitute the currency in circulation. This means that a developing nation like Nigeria needs to monitor the trend of development of e-money on the market and the increasing degree of use by institutions and clients. Lastly, the regulatory authorities need to develop the capacity to manage an e-money driven economy more closely and more carefully.
Highlights
This study is set to ascertain the relationship between the use of e-payment products and the value of currency in circulation in Nigeria
The Central bank of Nigeria has not recorded a decrease in currency in circulation followed by an increase in the use of epayment products; instead, it is recorded that between 2009 and 2018, the value of currency in circulation grew by about 97.18%
The variables MOPAY, NIBSS Electronic Funds Transfer (NEFT), NIBSS Instant Payment (NIP), REMTA, Real-time Gross Settlement Scheme (RTGS) and WEBPAY, all have an inverse relationship with currency in circulation, implying that a unit change in any of the variables will bring about a corresponding decrease in the currency in circulation (CIC)
Summary
"Electronic money is expected to replace physical cash, if not all, small-value payments continue to evoke considerable interest, both among the public and the various regulatory authorities." (Papadopoulos, 2007). The objective was to achieve Nigeria's vision 2020 goal of pertaining to the top 20 economies of the world The essence of this program was to reduce the volume of cash in circulation in Nigeria while encouraging the use of electronic-based systems or e-payment systems to carry out the transactions. In February 2020, the current CBN Governor, Godwin Emefiele, in an interview, said that cashless policy will be re-implemented in April 2020 because there is still a high volume of cash in circulation. This is evidenced by the consistent increase in the number of bills printed by the CBN each year (Ahon, 2020; Paul, 2019).
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