The amount of currency outside the Nigerian banking system fell to N3.66 trillion in July 2024, marking a 3.32% decrease from the previous month’s figure of N3.79 trillion.
This decline, the second this year, reflects the Central Bank of Nigeria’s continued efforts to tighten liquidity and encourage the deposit of funds into the formal banking sector.
The July decrease is notably larger than the 0.62% drop observed between March and April, when the amount fell from N3.63 trillion to N3.61 trillion, according to Nairametrics.
Despite this decrease in currency outside the banks, the total currency in circulation saw a marginal increase from N4.05 trillion in June to N4.06 trillion in July, indicating a modest growth of 0.12%.
This slight uptick in circulation suggests the economy may be stabilizing in terms of cash usage, potentially influenced by a rise in digital transactions or regulatory efforts to manage cash flow.
Additionally, the proportion of currency outside banks dropped to 90.39% of the total circulation in July, down from 93.59% in June.
June 2024 had marked a historic milestone, with currency in circulation surpassing N4 trillion for the first time.
However, while currency circulation reached a new high in July, the decrease in currency held outside banks indicates a potential shift in behavior, with more funds being deposited into the banking system.
This trend underscores the effectiveness of the CBN’s ongoing initiatives to bring more money into formal financial channels.
