Cash Outside Banks Falls Again in April as CBN Holds Rates Steady

Samuel Mobolaji

Currency held outside Nigeria’s banking system declined for the second time in 2025, dropping to N4.57 trillion in April from N4.60 trillion in March, according to new figures from the Central Bank of Nigeria (CBN).

The dip follows the apex bank’s decision to maintain its benchmark Monetary Policy Rate at 27.5 per cent during the May 2025 Monetary Policy Committee meeting.

Despite the decline, the April figure still represents a 26.8 per cent year-on-year increase from N3.61 trillion recorded in April 2024. However, the N26.4 billion month-on-month drop signals a cautious return to earlier downward trends in physical cash levels, suggesting the CBN’s liquidity tightening and push for digital alternatives may be gaining traction.

The reduction in cash outside the banking system began after the usual festive season spike in December 2024, when the figure hit a record N5.13 trillion. It then dropped sharply to N4.74 trillion in January, and further to N4.52 trillion in February. March saw a slight uptick to N4.60 trillion, but April reversed that gain, pointing to a sustained moderation rather than a one-off movement.

Between December 2024 and April 2025, the amount of currency outside banks has fallen by N555 billion, or 10.8 per cent, reinforcing the effectiveness of ongoing liquidity control measures aimed at reducing excess cash in circulation.

The composition of cash is also beginning to shift. In April, N4.57 trillion—or 91.1 per cent—of the total N5.01 trillion currency in circulation was held outside banks. This is a slight drop from 91.9 per cent in March and the same level in April 2024. While still overwhelmingly high, the marginal decrease suggests more Nigerians are either banking their cash or shifting to digital transactions such as mobile money, point-of-sale terminals, or transfers.

The movement is subtle but directionally important. Even a small shift in cash behaviour hints at progress in financial inclusion and monetary policy transmission. The reduced physical cash in the informal economy may also be helping to ease inflationary pressure, supporting the CBN’s hawkish policy stance without the need for further tightening.

Nonetheless, challenges persist. With over 91 per cent of total cash still circulating outside the formal banking system, Nigeria continues to face significant obstacles to effective monetary policy, financial traceability, and anti-corruption efforts. Sustained downward movement over the coming quarters will be necessary to signal meaningful structural change.