Nigeria’s currency in circulation (CIC) declined to ₦5 trillion in March 2025, according to new data released by the Central Bank of Nigeria (CBN). This marks the third consecutive monthly drop in 2025.
The apex bank’s report showed that CIC fell by 0.79% month-on-month from ₦5.04 trillion in February and ₦5.24 trillion in January. This represents a cumulative decline of ₦240 billion or 4.58% during the first quarter of 2025.
Currency in circulation refers to the total amount of cash — including coins and paper money — issued by the CBN and actively used by individuals and businesses for transactions outside of the formal banking sector.
A reduction in CIC can signal a number of developments, including increased bank cash mop-ups, a shift toward digital payments, or a tightening of monetary conditions in response to inflationary trends.
In contrast to the fall in currency circulation, commercial banks’ reserves held with the CBN increased significantly, reaching ₦28.5 trillion in March 2025. This compares with ₦27.6 trillion in February and ₦27.43 trillion in January.
The surge in reserves is indicative of enhanced liquidity within the banking system and may reflect a tightening monetary policy stance by the CBN.
Analysts suggest this uptick may be due to stronger deposit inflows, compliance with the CBN’s Cash Reserve Ratio (CRR), or deliberate policy measures to manage inflationary pressures.
The simultaneous drop in cash circulation and rise in bank reserves underscores the central bank’s broader efforts to manage liquidity, contain inflation, and support the stability of the naira.
Experts also attribute the trend to continued efforts to deepen digital financial services and reduce dependence on physical cash.
Some observers note that while there is a push toward digital payment systems, there is also a notable increase in the volume of money held outside traditional banking channels, signalling evolving public preferences or caution over financial reforms.
In January 2025, the CBN launched a new digital naira payment solution aimed at improving payment efficiency for Ministries, Departments, and Agencies (MDAs), with a target of enhancing turnaround time by 70%.
This initiative forms part of the “Digital First” transformation strategy introduced by CBN Governor Olayemi Cardoso in December 2023, with the aim of modernising central bank operations and promoting financial inclusion.
Additionally, at its 299th Monetary Policy Committee (MPC) meeting held in February 2025, the CBN set the Cash Reserve Ratio (CRR) at 50%, further reinforcing its commitment to curbing inflation and tightening liquidity within the economy.