Currency Outside Banks Now N4.29tn, 94.2% of Currency in Circulation 

Nume Ekeghe

Currency outside banks in Nigeria surged to a record high of N4.29 trillion in October 2024, accounting for 94.2 per cent of the total currency in circulation, data released by the Central Bank of Nigeria (CBN) has revealed.

This marks a notable 6.77 per cent increase from N4.02 trillion in September and a staggering 30.6 per cent rise since January.

The total currency in circulation, which includes cash held in banks and the public, also climbed to N4.55 trillion in October, up from N4.31 trillion in September and N4.14 trillion in August.

While circulation rose by 5.8 per cent month-on-month, the faster pace of growth in cash held outside banks highlights shifting trends in cash management across the country.

The proportion of currency outside banks relative to total circulation has steadily increased throughout the year, from 89.9 per cent in January to 94.2 per cent in October. This narrowing gap suggests an ongoing preference for liquidity outside the formal banking system and reliance on cash-based transactions.

A monthly analysis showed in January 2024, currency outside banks stood at N3.28 trillion, representing 89.9 per cent of the N3.65 trillion total currency in circulation. By February, this figure rose to N3.41 trillion, a 4.0 per cent increase from January, while the total currency in circulation climbed modestly to N3.69 trillion, with 92.5 per cent of it held outside banks.

March saw a more significant jump, with currency outside banks reaching N3.63 trillion, a 6.2 per cent rise from February. The total currency in circulation increased to N3.87 trillion, bringing the proportion of cash outside banks to 93.8 per cent. However, in April, currency outside banks slightly declined to N3.61 trillion, down by 0.6 per cent from March, even as total currency in circulation rose to N3.92 trillion. Despite this, 92 per cent of the currency remained outside the banking system.

In May, currency outside banks rebounded to N3.71 trillion, a 2.5 per cent increase from April, while the total in circulation rose to N3.97 trillion, with 93.5 per cent held outside banks. June recorded another rise in cash held outside banks, reaching N3.79 trillion, up 2.2 per cent from May. The total currency in circulation increased to N4.05 trillion, maintaining the 93.5 per cent share of cash held outside the banking sector.

A notable shift occurred in July, when currency outside banks declined to N3.67 trillion, a 3.1 per cent drop from June, even as total currency in circulation remained steady at N4.05 trillion. This brought the proportion outside banks to 90.6 per cent, a slight reduction. In August, currency outside banks climbed again to N3.87 trillion, a 5.6 per cent increase from July, while the total in circulation rose to N4.14 trillion, bringing the share outside banks back up to 93.5 per cent.

September marked another increase, with currency outside banks reaching N4.02 trillion, up by 3.9 per cent from August. Total currency in circulation also rose to N4.31 trillion, maintaining a proportion of 93.3 per cent outside the banking system. Before peaking in October with currency outside banks surging to N4.29 trillion, reflecting a 6.8 per cent increase from September.

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