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Currency Outside Banks Hit N3.87trn In Q1 2024

However, currency outside banks grew significantly during the first quarter, rising from N3.28 trillion in January to N3.41 trillion in February and N3.63 trillion in March.

By Johnson Atoukudu

Nigeria’s Currency in Circulation (CIC) rose to N3.87 trillion by the end of the first quarter of 2024 due to a surge in money outside the banking system, as indicated by the latest data on the Central Bank of Nigeria’s website. CIC increased from N3.69 trillion in February and N3.65 trillion in January.

However, currency outside banks grew significantly during the first quarter, rising from N3.28 trillion in January to N3.41 trillion in February and N3.63 trillion in March.

This data suggests that over 90% of the currency in circulation is held outside the banking system, indicating a preference for cash among Nigerians.

This trend coincides with banks reintroducing processing fees for deposits. Muhammad Abdullahi, a member of the Monetary Policy Committee of the CBN, highlighted during their March meeting that the high amount of currency outside banks is contributing to the country’s inflation.

“While this cannot be directly influenced using monetary policy tools, the bank’s response to the drivers of headline inflation is targeted at addressing identified monetary drivers such as money supply growth, exchange rate depreciation and Currency-Outside-Banks, the combined impact of which will dampen inflationary pressure significantly,” he said.

During the peak of the currency redesign policy in January 2024, the currency in circulation amounted to N1.386 trillion, with 57 percent, equivalent to N792.184 billion, held outside the banking system.

By February, the amount of cash outside banks increased to N843.311 billion, constituting 85.9 percent of the total N982.097 billion in circulation. This percentage slightly decreased in March to 85.8 percent, with N1.445 trillion out of the total N1.683 trillion of Currency in Circulation held outside the banking system.

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