Nume Ekeghe

Data released by the Central Bank of Nigeria (CBN), has showed that Currency in circulation (CIC) in Nigeria declined for the first time in two years, falling to N5.037 trillion in February 2025 from a record N5.235 trillion in January 2025.

Despite the decline, CIC remains significantly higher than the N3.693 trillion recorded in February 2024, underscoring sustained demand for cash transactions.

The data named, “money and credit statistics” also reveal a decrease in cash held outside the formal banking system, which dropped by 4.7 per cent to N4.515 trillion in February from N4.737 trillion in January. This brings the proportion of CIC held outside banks to 89.63 per cent, down from 90.4 per cent in the previous month.

The decline suggests a slight shift away from cash transactions after months of consistent growth. However, a substantial portion of liquidity remains outside the banking system, reflecting continued public preference for cash over digital or banking channels.

The broader money supply (M2) also contracted, falling to N110.307 trillion in February from N110.93 trillion in January. Quasi-money, which includes near-money assets like savings deposits and money market instruments, declined from N74.163 trillion to N72.738 trillion. Meanwhile, demand deposits funds held in bank accounts accessible on demand increased to N33.053 trillion from N32.029 trillion, indicating heightened banking activity despite the dip in overall money supply.

A review of currency circulation trends over the past year highlights a steady increase in CIC throughout 2024 before the recent dip. In February 2024, CIC stood at N3.69 trillion, with N3.41 trillion (92.5 per cent) outside the banking system. By March, CIC had risen to N3.87 trillion, with N3.63 trillion outside banks. April saw a slight decline in the proportion of cash outside banks, with N3.92 trillion in circulation and N3.61 trillion (92 per cent) held outside banks. However, this trend reversed in May, as CIC rose to N3.97 trillion, with N3.71 trillion outside banks. June saw a continued increase to N4.05 trillion, maintaining a 93.5 per cent share of cash held outside banks.

By July, currency outside banks dipped slightly to N3.67 trillion (90.6 per cent), while total CIC remained at N4.05 trillion. In August, both figures climbed again, with CIC reaching N4.14 trillion and N3.87 trillion outside banks. September followed this trajectory, with total CIC at N4.31 trillion, of which N4.02 trillion was held outside banks. The trend continued into October, with CIC rising to N4.55 trillion and N4.29 trillion outside banks. November saw another increase, peaking at N4.88 trillion in circulation and N4.65 trillion outside banks—the highest proportion recorded in 2024. By December, the figures had yet to be released, but January 2025 set a new record at N5.24 trillion before February’s decline.