Nigeria’s currency in circulation declined to N5 trillion in March 2025, according to the latest data from the Central Bank of Nigeria (CBN), reflecting a continued drop for the third consecutive month in 2025.
The report published by the apex bank showed that currency in circulation (CIC) fell by 0.79% month-on-month from N5.04 trillion in February 2025 and N5.24 trillion recorded in January 2025.
This marks a cumulative decline of N240 billion or 4.58% in the first quarter of 2025.
Currency in circulation refers to the total amount of cash — coins and paper currency — that has been issued by the CBN and is physically used for transactions by the public and businesses outside of the banking system.
A drop in CIC may indicate increased cash mop-up by banks, a shift to digital transactions, or broader macroeconomic tightening.
Bank Reserves Rise to N28.5 Trillion
Meanwhile, banks’ reserves held with the CBN rose to N28.5 trillion in March 2025, up from N27.6 trillion in February and N27.43 trillion in January. This increase suggests improved liquidity within the banking sector and a potentially tighter monetary policy stance by the CBN.
The surge in bank reserves could be attributed to higher deposit inflows, restricted liquidity, or a deliberate policy by the CBN to rein in inflationary pressures.
It may also reflect increased compliance by deposit money banks with the Cash Reserve Ratio (CRR) requirement of the apex bank.
What this means
The drop in CIC alongside rising bank reserves highlights the central bank’s ongoing efforts to control inflation, stabilize the naira, and encourage financial intermediation.
- Analysts say the trend may also be linked to sustained efforts to deepen digital payment adoption and reduce the dominance of cash-based transactions in the economy.
- Some observers think the recent push for digital transactions by CBN, with a steady increase in the volume of money circulating outside formal banking channels may also be responsible for this development.
Additionally, with the CBN maintaining a hawkish stance on monetary policy and implementing various reforms to stabilize macroeconomic indicators, these movements in money supply aggregates could signal a recalibration of liquidity levels in the financial system.
What you should know
In January 2025, the apex bank launched a new naira payment solution aimed at enhancing payment turnaround time for Ministries, Departments, and Agencies (MDAs) by 70%.
The CBN said the launch is an extension of its digital transformation project, “Digital First,” which was initiated by the CBN Governor, Olayemi Cardoso, in December 2023 as part of his commitment to modernising the Bank’s operations.
At its 299th Monetary Policy Committee meeting in February 2025, the apex bank fixed Cash Reserve Ratio to 50 per cent.
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