By the conclusion of the first quarter of 2024, money outside the banking system had expanded to the tune of N3.87 trillion, which is the value of Nigeria’s Currency in Circulation, or CIC. 

The most recent credit and money statistics available on the Central Bank of Nigeria website support this.

By the end of March 2024, CIC had increased to N3.87 trillion from N3.69 trillion in February and N3.65 trillion in January.

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

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According to the data, more than 90% of money in circulation is kept outside banks, suggesting that Nigerians carry more cash than others. 

The change occurs when banks start charging processing fees for deposits.

Muhammad Abdullahi, a CBN’s Monetary Policy Committee member, stated in statements made public last week that the central bank had determined that excessive amounts of cash outside of banks were one of the monetary causes of the nation’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.

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At the peak of the currency redesign strategy in January 2024, there was N1.386 trillion in circulation, with N792.184 billion, or 57%, of the total amount of cash outside banks.

Cash outside banks increased to N843.311 billion by February, accounting for 85.9% of the N982.097 billion in circulation.

With N1.445 trillion of the N1.683 trillion CIC outside the banking system, it fell even lower in March to 85.8%.

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