…3.32% Decrease in Currencies Outside Banks
Niyi Jacobs
The total amount of currency in circulation in Nigeria reached N4.05 trillion in July 2024, with N3.66 trillion held outside the banking system and N392 billion in banks. This represents a 3.32% decrease in the amount of currency held outside banks compared to the previous month.
The Central Bank of Nigeria (CBN) has been implementing policies aimed at reducing the amount of cash held outside the banking system, and the latest figures suggest that these efforts may be starting to bear fruit.
While the amount of currency in circulation saw a marginal increase of 0.12% to N4.05 trillion in July, the amount held outside banks dropped to 90.39% (N3.66 trillion), from 93.59% of currency in circulation recorded in June 2024.
The amount of currency held in banks, on the other hand, increased to N392 billion, representing 9.61% of the total currency in circulation.
This shift in the distribution of currency suggests that more people are being brought into the formal banking sector, improving financial inclusion.
The drop in currency held outside banks also corresponds with a drop in inflation, as Nigeria’s headline inflation rate decreased to 33.40% in July 2024, down from 34.19% in June 2024.
The CBN’s efforts to reduce the amount of cash held outside banks are aimed at improving the effectiveness of monetary policy and reducing the risk of cash-based disruptions to the economy.
As the economy continues to evolve, it will be important to monitor the distribution of currency and the impact of the CBN’s policies on financial inclusion and inflation.
