Nigeria’s Currency In Circulation Falls By ₦240bn – CBN

Nigeria’s currency in circulation (CIC) declined by ₦240bn in the first quarter of 2025, according to newly released data from the Central Bank of Nigeria (CBN), reflecting a 4.58 per cent contraction over the three months.

The report, published by the apex bank, shows that the total currency in circulation stood at ₦5trn in March 2025, down from ₦5.04trn in February and ₦5.24trn in January.

This shows the third consecutive monthly decline, underscoring a tightening liquidity environment and potential shifts in consumer cash usage patterns.

The drop suggests ongoing monetary tightening by the CBN, possibly aimed at curbing inflation, reducing cash-based transactions, and encouraging digital financial inclusion.

In contrast to the declining CIC, bank reserves held with the CBN rose to ₦28.5trn in March 2025, up from ₦27.6trn in February and ₦27.43trn in January, indicating improved liquidity within the formal banking sector.

The increase in reserves suggests that deposit money banks (DMBs) are holding more funds with the central bank — a trend often associated with compliance with the Cash Reserve Ratio (CRR) and tighter monetary policy conditions.

Experts believe that such a decline may be influenced by multiple factors, including increased cash mop-up by commercial banks, rising adoption of digital payment platforms, or direct policy interventions to reduce excess liquidity in the economy.

Reacting to the Central Bank of Nigeria’s latest data showing a ₦240 billion decline in currency in circulation (CIC) in the first quarter of 2025, the Group Managing Director of Crane Securities Limited, Mr. Mike Eze described the development as a deliberate move by the apex bank to curb inflation and stabilize the national currency.

In his assessment, the GMD noted that the continued drop in CIC over the past three months is a strong indicator of the CBN’s intensified efforts to manage excess liquidity in the economy.

“It also reflects the impact of stricter regulatory enforcement, as well as the growing efficiency in Nigeria’s cashless policy framework,” he said.

He added that the CBN appears to be taking a multi-pronged approach that includes tightening monetary supply, enforcing compliance among deposit money banks, and encouraging digital payment alternatives to reduce reliance on cash-based transactions.

According to him, this strategy could yield multiple benefits, including enhanced monetary policy transmission, improved financial transparency, and reduced pressure on foreign exchange reserves, all of which are crucial for macroeconomic stability.

The Crane Securities chief also emphasized the importance of sustained policy consistency and collaboration between financial institutions and regulators to ensure that the transition toward a more digital and formal financial ecosystem is both inclusive and effective.

Although the broader implications of the CIC contraction remain to be seen, the combined indicators point to a more conservative monetary environment heading into the second quarter of 2025.

As Nigeria continues to navigate economic headwinds including exchange rate volatility, external debt servicing, and structural inflation, stakeholders will be closely watching the CBN’s next moves, particularly in upcoming Monetary Policy Committee (MPC) decisions.

Nigeria’s Currency In Circulation Falls By ₦240bn – CBN is first published on The Whistler Newspaper