CBN says 94.3% of currency in circulation outside banks in October 2024

• The Central Bank of Nigeria says 94.3 per cent of the currency in circulation is outside banks
• The percentage of currency in circulation outside banks fluctuated between July and October 2024
• The figure shows an increased preference for retaining cash outside formal banking channels

The Central Bank of Nigeria (CBN) says 94.3 per cent of the currency in circulation is outside the banking system, despite a year-on-year increase of N1.59 trillion in the amount of currency held outside banks.

According to CBN’s Money and Credit Statistics, cash outside banks reached N4.29 trillion in October 2024, representing 94.3 per cent of the total of N4.55 trillion currency in circulation.

On a year-on-year basis, cash outside banks grew by 59 per cent or N1.59 trillion from N2.70 trillion in October 2023, when 89.6 per cent of the total currency was outside banks.

The amount is a 6.8 per cent or N270 billion month-on-month increase from the N4.02 trillion recorded in September 2024.

Timeline of cash outside banks from July 2024

An analysis of CBN’s Money and Credit Statistics shows fluctuation in the amount and percentage of currency in circulation outside the bank system in the second half (H2) of 2024.

In September 2024, currency outside banks was N4.02 trillion, which is 93.1 per cent of the N4.31 trillion of total currency in circulation.

On a year-on-year basis, the figure increased by 66.3 per cent compared to N2.42 trillion recorded in September 2023, when 87.5 per cent of the total was outside banks.

In August 2024, currency outside banks stood at N3.87 trillion, which is 93.3 per cent of the total currency in circulation of N4.14 trillion.

On a year-on-year basis, currency outside banks increased by 73.9 per cent compared to N2.22 trillion recorded in August 2023, when 83.6 per cent of the total currency was outside banks.

In July 2024, N3.67 trillion was outside banks, which represents 90.5 per cent of the N4.05 trillion of total currency in circulation.

Trend shows preference for retaining cash outside banks

The trend of an increased percentage of currency in circulation outside the banking system indicates the public’s preference for retaining cash outside formal banking channels and an increased reliance on cash.

This has implications for the banking sector and impacts the CBN’s cashless policy drive.

It is also responsible for the CBN’s tight monetary stance aimed at halting excess liquidity and reining in the surging inflation.

CBN to fine banks over naira sale

To halt the illicit flow of minted banknotes to currency hawkers and economic agents that commodify naira banknotes, the CBN announced a N150 million fine at first instance per branch of Deposit Money Banks found guilty.

The CBN noted that the sale of naira banknotes to currency hawkers by banks undermines efficient and effective cash distribution to banks’ customers who face challenges accessing cash in banking halls despite previous warnings from the CBN.

CBN to start fining banks over cash scarcity at ATMs

Meanwhile, TheRadar reported that the Central Bank of Nigeria (CBN) issued a stern warning to financial institutions over the ongoing cash scarcity at Automated Teller Machines (ATMs) across the country. 

CBN governor, Olayemi Cardoso, announced that penalties would be imposed on erring banks and other financial players during his address at the annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria on Friday, November 29.