Nigeria has recorded another decline in the amount of cash held outside the banking system, as tighter monetary policies and increased use of digital payments continue to push more money back into formal banking channels.
New data released by the Central Bank of Nigeria showed that currency outside banks dropped to N5.08 trillion in April 2026. This represents a decrease from the N5.19 trillion recorded in February 2026, extending a gradual downward trend that started after cash holdings reached record levels at the end of 2025.
The report also showed that total currency in circulation fell slightly to N5.65 trillion in April, compared to N5.71 trillion in February. The development reflects a slowdown in the amount of physical cash moving around the economy.
Financial analysts say the decline is largely linked to the Central Bank’s tight monetary policies aimed at reducing inflation and controlling excess liquidity in the financial system. Higher interest rates in the fixed-income market have encouraged individuals and businesses to return idle cash to banks in search of better investment returns.
At the same time, the growing popularity of electronic payment platforms, mobile banking, and digital transfers has continued to reduce dependence on physical cash for daily transactions.
The latest figures mark the third straight monthly drop in cash outside banks since December 2025, when currency held outside the banking system climbed to an all-time high of N5.40 trillion. That surge was driven by heavy festive spending, rising inflation, and increased demand for cash transactions, especially within Nigeria’s informal sector.
According to the data, cash outside banks declined slightly to N5.21 trillion in January before easing further to N5.19 trillion in February. With the April figure now standing at N5.08 trillion, the country has recorded a reduction of more than N316 billion from the December peak.
A similar pattern was seen in overall currency circulation. Currency in circulation stood at N5.73 trillion in January, dropped to N5.71 trillion in February, and later declined further to N5.65 trillion in April.
Economists believe the moderation reflects the impact of the Central Bank’s aggressive liquidity control measures. Authorities have continued efforts to strengthen monetary policy, manage inflationary pressure, and improve confidence in the banking system.
Despite the recent improvements, experts note that Nigeria still remains heavily dependent on cash transactions, particularly in the informal economy where many businesses and individuals rely on physical money for daily operations.
On a year-on-year basis, cash outside banks remains much higher than the N4.51 trillion recorded in February 2025. This shows that although digital banking adoption is increasing, cash-intensive activities are still deeply rooted in the economy.
Throughout 2025, cash outside banks continued to rise steadily as inflation and economic uncertainty pushed households and businesses to keep larger amounts of money outside formal financial institutions.
By mid-2025, cash outside banks crossed the N5 trillion mark for the first time, driven by increased transaction demand and stronger cash preference among informal sector operators. The situation worsened in the final quarter of the year as seasonal spending and concerns over electronic payment reliability during peak periods pushed cash holdings to record highs.
However, the latest trend suggests that tighter monetary conditions and growing confidence in digital payment systems may gradually reduce the economy’s dependence on physical cash in the coming months.
