Abuja, Nigeria— Data from the Central Bank of Nigeria (CBN) has revealed a decrease in the amount of currency held outside the banking system, dropping to N3.66 trillion in July 2024. This figure represents a 3.32% decline from the previous month.

According to the Money and Credit data published on the CBN website, the proportion of currency held outside banks fell to 90.39% in July from 93.59% recorded in June 2024. Despite this decrease, the overall value of currency in circulation increased slightly, rising to N4.05 trillion from N4.04 trillion.

The rise in currency circulation from the beginning of the year was 11.05%, a significant slowdown compared to the 56.17% increase observed in the same period of 2023. The decrease in currency held outside the banking system comes amid ongoing inflationary pressures.

Members of the CBN’s Monetary Policy Committee have attributed the accelerating inflation partly to the excess cash circulating outside the formal banking sector. In response, the CBN has maintained a strict monetary policy stance, including raising the Monetary Policy Rate (MPR) by 50 basis points to 26.75% in July 2024, up from 26.25% in June.

In addition to these measures, the CBN has been actively managing money supply. The broad measure of money supply, known as M3, reached a high of N106.27 trillion in July 2024, amid the apex bank’s tightening efforts.

Credit to the private sector also saw a notable increase, reaching N75.48 trillion year-on-year in July 2024. On a month-on-month basis, banks’ credit to the private sector grew by 3.13%, up from N73.19 trillion in June.

The ongoing adjustments in monetary policy and management of money supply are part of the CBN’s broader strategy to combat inflation and stabilize the economy.