Cash outside banks falls N485.8bn to seven-month low

Cash held outside Nigeria’s banking system declined by N485.80 billion in the first half of 2026 to a seven-month low of N4.92 trillion, signalling that more physical currency is returning to the banking sector as the Central Bank of Nigeria (CBN) intensifies efforts to deepen digital payments and reduce cash dependence.

Latest Money and Credit Statistics released by the CBN showed that currency outside banks fell by 8.98 per cent from N5.41 trillion in December 2025 to N4.92 trillion in June 2026, the lowest level since November 2025, when it stood at N4.91 trillion.

The decline was sharper than the contraction in overall currency in circulation, which dropped by N209.56 billion, or 3.66 per cent, from N5.73 trillion at the end of 2025 to N5.52 trillion in June 2026.

The figures indicate that a larger proportion of physical cash was redeposited into commercial banks rather than permanently withdrawn from circulation. Data showed that currency outside banks declined from N5.41 trillion in December to N5.25 trillion in January and N5.19 trillion in February.

Although March figures were unavailable, cash outside banks eased further to N5.08 trillion in April.

The downward trend was briefly interrupted in May when cash outside banks rose by N109.34 billion, or 2.15 per cent, to N5.19 trillion. However, the increase proved temporary as the figure plunged by N270.97 billion, or 5.22 per cent, in June to N4.92 trillion, representing the largest monthly decline during the six months.

Despite the improvement, Nigeria remains heavily cash-dependent.

The data showed that 89.11 per cent of total currency in circulation remained outside the banking system in June 2026, compared with 91.27 per cent in May and 89.74 per cent in June 2025.

This means that for every N100 in circulation, Nigerians held approximately N89.11 outside the banking system in June, compared with N91.27 a month earlier.

Compared with December 2025, when 94.33 per cent of all currency in circulation was outside banks, the latest figures represent a decline of more than five percentage points, while the proportion of cash retained within banks almost doubled from 5.67 per cent to 10.89 per cent.

The trend suggests that although physical cash continues to dominate transactions, particularly in the informal economy, more currency is gradually flowing back into the formal banking system.

The development comes as the CBN intensifies efforts to accelerate Nigeria’s transition towards a more digital and inclusive payments ecosystem.

At the launch of the Nigeria Payment System Vision (PSV) 2028, CBN Governor Olayemi Cardoso said the apex bank aims to reduce the proportion of currency held outside banks to below 40 per cent of total currency in circulation.

The strategy includes deploying more than 10 million QR-code and tap-to-pay acceptance points across markets, transport hubs, rural communities and commercial centres to reduce reliance on cash transactions and deepen financial inclusion.