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Central Bank of Nigeria revealed that the currency in circulation amounted to ₦3.87 trillion, marking an increase from ₦3.69 trillion in February and ₦3.65 trillion in January.
Despite this, the amount of currency circulating outside of banks has steadily increased during the initial quarter, escalating from ₦3.28 trillion in January to ₦3.41 trillion and ₦3.63 trillion in February and March, respectively.
According to the Punch, the data indicates that over 90 percent of the currency in circulation is held outside of the banking system, suggesting that Nigerians are retaining more cash.
During the March meeting, a member of the Monetary Policy Committee of the CBN, Muhammad Abdullahi, stated in his personal statement that the apex bank had recognized the high amount of currency held outside banks as one of the factors driving the country’s inflation.
Abdullahi said, “From available data, prices of domestic food items remain the major driver of headline inflation because of supply shortages and high cost of logistics and distribution.
“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.”
In January 2024, currency in circulation under the currency redesign policy totaled ₦1.386 trillion, of which 57% or ₦792.184 billion was outside banks. By February, cash outside banks rose to ₦843.311 billion, representing 85.9% of the total ₦982.097 billion.
In March, this percentage slightly decreased to 85.8%, with ₦1.445 trillion of the ₦1.683 trillion in circulation held outside banks.