The Central Bank of Nigeria (CBN) has officially reported that money outside the banking system decreased to N3.66 trillion in July.
These results indicate that the CBN’s efforts to tighten liquidity and promote formal banking deposits yield positive outcomes.
This substantial decrease, the second of this year, underscores a noticeable shift in public behaviour towards an increased reliance on banking institutions.
The N3.66 trillion shows a significant 3.32% decline (equivalent to N130 billion) from June’s N3.79 trillion, marking a much more substantial reduction than the 0.62% (N20 billion) decline recorded between March and April. These patterns show a growing preference among Nigerians for depositing their money in banks rather than holding it in cash.
Notably, while currency outside banks declined, the total currency in circulation experienced a marginal increase to N4.05 trillion, representing a modest rise of just 0.12%.
The development suggests a stabilisation in cash usage across the economy, attributed to the increased adoption of digital transactions and effective regulatory measures managing cash flow.
Financial analysts have stressed the importance of this decline. The drop in the percentage of currency outside of banks, from 93.59% in June to 90.39% in July, points to a significant transformation in how money is held, with more individuals and businesses transitioning towards formal banking channels.
This shift is crucial for enhancing financial inclusion and empowering the CBN to exert greater control over monetary policy.
The Sun reported that the drop in currency outside banks also aligns with a slight decrease in Nigeria’s headline inflation rate, which lowered to 33.40% in July from 34.19$ in June.
This marks the first decline in the inflation rate since December 2022, indicating that the CBN’s monetary policies might effectively curb inflation and stabilise the economy.
As the CBN implements policies to boost economic stability and encourage Nigerians to embrace formal banking, these trends show a transformative move in Nigeria’s financial landscape.
TimesNow.com.ng earlier reported that the Nigerian currency, the naira, made a fantastic recovery in the official and parallel markets after crossing the N1,600 ceiling on Wednesday, August 28, 2024.
The local currency’s plunge below the N1,600 mark sent shockwaves into the market as efforts by the Central Bank of Nigeria (CBN) to stem the free fall of the naira seem to have waned after embarking on the Retail Dutch Auction System (rDAS), earlier in the month.
However, on Thursday, August 29, 2024, the naira bounced back, closing at N1,593.33 per dollar, marking a departure from the N1,606 it traded the previous day.
Source: TimesNow.com.ng
