The Central Bank of Nigeria (CBN) has revealed in its latest data that the total currency in circulation in March 2025 stood at N5.00 trillion, of which about N4.6 trillion is outside the banking system, indicating that 91.9 per cent of all cash in the economy are not in the bank.
Business Post reports that in the same period of last year, the value of cash held outside the banks was N3.63 trillion from the N3.87 trillion in circulation.
Nigerians have continued to keep cash outside the banking system because of the harrowing experience of December 2022 and early 2023 due to the Naira redesigned policy of the CBN.
The policy caused cash crunch, triggering a series of violent protests across the country. It was believed that the central bank, under the then governor, Mr Godwin Emefiele, was to frustrate the president ambition of President Bola Tinubu.
The apex bank had said in a bid to help the government tackle insecurity in Nigeria, it was changing the outlook if the N200, N500, and N1,000 bank notes.
The idea was to phase out the old notes but this was frustrated as the state governors challenged this and got a judgement from the Supreme Court against the policy. Both the old and new bank notes are currently in use.
In the same report, the central bank also disclosed that the broad money supply in Nigeria increased by 24 per cent on a year-to-year basis to N114.2 trillion in March 2025 from the N92.19 trillion in March 2024, and on a month-on-month basis, it went up by 3.2 per cent from N110.71 trillion in February 2025.
The hike in money supply occurred despite the central bank raising the Cash Reserve Ratio (CRR) to 50 per cent at its last Monetary Policy Committee (MPC) meeting, with the benchmark interest rate at 27.50 per cent.
The National Bureau of Statistics (NBS) last Tuesday revealed that inflation rate for March 2025 surged to 24.23 per cent from 23.18 per cent in February 2025.
Back to the money supply hike, it was mainly influenced by a sharp 38.9 per cent rise in net foreign assets to N45.17 trillion, while the net domestic assets went down by 11.7 per cent to N69.05 trillion due to tighter liquidity within the domestic financial system.