Nigeria recorded a decline in the amount of cash held outside the banking system between February and April 2026 after the Central Bank of Nigeria reduced interest rates earlier in the year. New figures released by the apex bank showed that more money returned to the banking sector during the period despite continued heavy reliance on cash transactions across the country.
According to data from the Central Bank of Nigeria’s money and credit statistics, currency held outside banks dropped from N5.19tn in February 2026 to N5.08tn in April 2026. This represents a decline of N104.76bn within two months after the Monetary Policy Committee reduced the Monetary Policy Rate from 27 per cent to 26.5 per cent during its first meeting of the year.
The latest figures indicate a 2.02 per cent reduction in cash circulating outside bank vaults. Although the CBN did not release March 2026 figures, the available data suggests that more funds remained within the formal banking system following the interest rate adjustment.
Total currency in circulation also declined during the same period. The amount fell from N5.71tn in February to N5.65tn in April, representing a decrease of N63.46bn. The share of money circulating outside the banking sector also reduced slightly, showing signs of tighter liquidity management by financial institutions.
In April 2026, currency outside banks accounted for 90.03 per cent of total money in circulation, lower than the 90.87 per cent recorded in February. The ratio was even higher at 94.33 per cent in December 2025, showing a gradual moderation over recent months.
Compared to December 2025, cash outside banks dropped by N324.16bn from N5.41tn to N5.08tn. This translates to a decline of nearly six per cent within four months.
Despite the improvement, cash transactions continue to dominate the Nigerian economy. On a year-on-year basis, currency outside banks still increased significantly. The figure rose from N4.57tn in April 2025 to N5.08tn in April 2026, reflecting an increase of N515.58bn or 11.29 per cent.
Similarly, total currency in circulation increased by 12.60 per cent year-on-year, rising from N5.01tn in April 2025 to N5.65tn in April 2026. Analysts say this highlights the continued dependence on physical cash even as digital payment channels expand across the country.
Meanwhile, commercial banks strengthened their reserve positions during the period. Bank reserves with the CBN increased from N32.74tn in February 2026 to N34.60tn in April 2026. This represents a rise of N1.86tn or 5.68 per cent.
Year-on-year data also showed that bank reserves climbed by N4.88tn from N29.72tn in April 2025, marking a 16.43 per cent increase. The rise suggests that banks maintained stronger liquidity buffers despite the central bank’s decision to ease monetary policy.
In addition, Nigeria’s broad money supply expanded further during the review period. Broad money supply rose from N123.12tn in February 2026 to N124.99tn in April 2026, driven mainly by growth in net domestic assets, which increased from N97.55tn to N100.97tn.
The figures reflect the complex balance between monetary easing, banking liquidity, and Nigeria’s persistent cash-based economic structure.
