Currency Out Of Control Experts Warn Of Rising Cash Outside Banks

The Central Bank of Nigeria (CBN) reported a significant surge in currency outside banks, hitting N4.02 trillion in September 2024, a 66.2% increase from N2.42 trillion in September 2023. This increase, partly due to limited public trust in banks and inflationary pressures, reflects only some of the factors behind the trend.…..CONTINUE READING 

In early 2024, I discussed the ongoing cash scarcity and its link to flawed policies by the Federal Government and CBN. The trust crisis in banking has worsened, stemming from actions by the CBN, security agencies, and judiciary, as well as from unpredictable changes in currency policies.

For instance, the chaotic currency redesign policy in February 2023 forced Nigerians to deposit their old currency but failed to ensure adequate availability of new notes, eroding confidence in banks. This policy, which lacked transparency and accountability, made depositors wary. The incident is often remembered as a “Monetary Equivalent of War,” causing lasting distrust in banking services.

Additionally, repeated misuse of ex-parte court orders to freeze bank accounts has further strained confidence. Freezing accounts of protestors and activists without due process has discouraged people from keeping funds in banks, fearing sudden restrictions. Many affected individuals, as well as observers, are choosing to hold cash rather than risking arbitrary freezes.

In summary, without addressing the underlying issues that affect trust and predictability in banking, currency outside banks is likely to keep increasing.