The Central Bank of Nigeria (CBN) has disclosed that as of October 2024, 94% of the nation's currency, totaling N4.29 trillion, is held outside the banking system. This represents a substantial share of the overall cash circulation, which amounts to N4.55 trillion.
Data from CBN's money and credit statistics indicate that the currency held outside banks has increased by N1.59 trillion since October 2023, when N2.70 trillion (89.6% of the total currency) was outside the banking sector. Additionally, there was a month-to-month increase of 6.8% from the N4.02 trillion recorded in September 2024.
The ongoing increase in cash held outside of banks reflects a significant dependence on physical currency, despite the government's initiatives to encourage cashless transactions.
Olusoji Oluwole, President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, has attributed this situation to the CBN's failure to sufficiently supply cash to commercial banks, leading to a scarcity of cash within the formal banking system.
This trend highlights the obstacles Nigeria faces in its transition to a cashless economy, emphasizing the necessity for more effective strategies to reintegrate cash into the banking sector.
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