As reported on the Central Bank of Nigeria website, the total value of Nigeria’s Currency in Circulation (CIC) reached N3.87 trillion by the end of the first quarter of 2024, driven by a surge in money outside the banking system.
By March 2024, the CIC had risen to 3.87 trillion, marking an increase from N3.69 trillion in February and N3.65 trillion in January.
During the first quarter, currency outside banks saw significant growth, starting at N3.28 trillion in January, then increasing to N3.41 trillion in February, and further to N3.63 trillion in March.
The data indicates that over 90% of the currency in circulation is held outside the banking system, suggesting a preference for cash holdings among Nigerians.
Recently, banks have reintroduced processing fees for deposits.
Speaking at the March meeting, one of the members of the Monetary Policy Committee of the CBN, Muhammad Abdullahi, highlighted the apex bank’s focus on addressing high currency outside banks as a key factor influencing the country’s inflation rate.
Abdullahi stated, “While direct influence through monetary policy tools may not be feasible, the CBN’s strategy to tackle inflationary pressures targets identified monetary drivers, such as growth in money supply, exchange rate fluctuations, and currency held outside banks.”
At the peak of the currency redesign policy in January 2024, the CIC was recorded at N1.386 trillion, with 57% of the cash held outside banks amounting to N792.184 billion.
In February, the amount of cash outside banks increased to N843.311 billion, making up 85.9% of the total of N982.097 billion in circulation.
By March, the percentage dropped slightly to 85.8%, with N1.445 trillion out of the N1.683 trillion CIC being outside the banking system.