Currency outside banks N4tn – CBN

Currency outside banks surged by 66.2 per cent in September 2024, reaching N4.02tn compared to N2.42tn in September 2023, a notable rise of N1.60tn in just one year.

This is according to the Money and Credit Statistics data of the Central Bank of Nigeria.

On a month-on-month basis, currency outside banks grew by 3.8 per cent in September 2024 from August’s figure of N3.87tn, translating to an increase of N147.9bn.

The trend suggests a growing inclination among the public to retain cash outside formal banking channels, a shift that could impact banks’ liquidity and shape monetary policy dynamics.

The CBN data further shows that a considerable proportion of Nigeria’s currency is held outside the banking system.

In September 2024, approximately 93.1 per cent of currency in circulation was outside banks, a rise from 87.5 per cent recorded in September 2023.

This shift may reflect limited trust in banking services, inflationary pressures, or a structural dependence on cash in Nigeria’s largely informal economy.

Such a high percentage of currency outside banks poses potential challenges for channelling funds into productive investments, potentially hindering economic growth.

The CBN report also highlights a parallel rise in overall currency in circulation, which encompasses both bank-held and outside cash.

In September 2024, currency in circulation climbed 56.1 per cent year-on-year to reach N4.31tn, up from N2.76tn in September 2023, reflecting an increase of N1.55tn.

This indicates that the volume of currency retained outside the banking sector outpaced the total released for circulation within the past year.

Compared to August 2024, currency in circulation rose by 4.0 per cent month-on-month, adding N166.2bn from the previous figure of N4.14tn.

Earlier in September, the CBN announced plans to sanction banks that fail to dispense cash through their automated teller machines, as part of efforts to improve cash availability in circulation.

The CBN also revealed plans to release an additional N1.4tn into circulation over the next three months to ease cash flow within the banking system.

This strategy aims to ensure that ATMs and bank branches have sufficient cash, addressing ongoing challenges faced by customers over cash shortages.

In related developments, The PUNCH observed that Nigeria’s money supply grew significantly by 62.8 per cent year-on-year in September 2024, despite the Monetary Policy Committee’s tightening stance intended to manage excess liquidity to control inflation.

According to CBN data, M3 reached N108.95tn in September 2024, up from N66.94tn in the same period last year.

On a month-on-month basis, money supply rose by 1.6 per cent, increasing from N107.19tn in August 2024.