In July 2024, the amount of currency outside Nigeria’s banking system decreased to N3.66 trillion, marking a 3.32% drop from the previous month.
This decline, larger than the previous decrease earlier in the year, reflects the Central Bank of Nigeria’s (CBN) ongoing efforts to tighten liquidity and encourage deposits into the formal banking sector.
Despite this, the overall currency in circulation saw a slight increase to N4.05 trillion, suggesting a stabilization in cash usage.
The decrease in currency outside banks indicates a shift towards more money being deposited into the banking system, which allows the CBN better control over monetary policy and inflation management.
This trend may signal improved financial inclusion and economic stability, as less cash is held outside the formal financial system.
The drop in currency outside banks also coincides with a decrease in Nigeria’s headline inflation rate to 33.40% in July 2024, marking the first decline in inflation since December 2022.