Nigeria’s Cash Outside Banks Drops by N485.8bn to Seven-Month Low

Physical cash is steadily finding its way back into Nigeria’s formal banking channels. According to the latest Money and Credit Statistics released by the Central Bank of Nigeria (CBN), currency outside banks fell from N5.41 trillion in December 2025 to N4.92 trillion in June, representing an 8.98 percent decline over six months. Data analysed by TheCable showed that currency outside banks dropped from N5.41 trillion in December 2025 to N4.92 trillion in June, representing an 8.98 percent decline over six months. Data analysed by The PUNCH showed that cash held outside banks dropped by N485.80bn, or 8.98 per cent, from N5.41tn recorded in December 2025 to N4.92tn in June 2026. This downward movement marks the lowest level recorded since November 2025, when cash outside banks stood at N4.91 trillion. The latest figure is the lowest level recorded since November 2025, when cash outside banks stood at N4.91 trillion, indicating that more cash is returning to the banking system. Data analyzed by Punch Newspapers indicates that total currency in circulation also contracted during the same period, dropping from N5.73 trillion in December 2025 to N5.52 trillion in June, a decrease of N209.56 billion or 3.66 percent. The CBN data also showed that total currency in circulation declined from N5.73tn in December 2025 to N5.52tn in June 2026, representing a decrease of N209.56bn, or 3.66 per cent. The sharper decline in cash outside banks, compared with the reduction in total currency in circulation, suggests that a larger proportion of physical cash was returned to the banking system rather than withdrawn permanently from circulation.

Monthly Fluctuations and the Steep June Contraction

The retreat of cash from circulation was not a straight line. Cash outside banks fell from N5.41 trillion in December to N5.25 trillion in January and N5.19 trillion in February before dropping further to N5.08 trillion in April. The figure, however, rose to N5.19 trillion in May before declining by N270.97 billion, or 5.22 percent, to N4.92 trillion in June — the largest month-on-month drop recorded in the available data. Currency outside banks declined from N5.41tn in December to N5.25tn in January before easing further to N5.19tn in February. Although the CBN did not publish data for March 2026, the figure fell to N5.08tn in April. The trend briefly reversed in May, when cash outside banks increased to N5.19tn from N5.08tn in April, reflecting a rise of N109.34bn, or 2.15 per cent.

That rebound proved temporary. The increase proved short-lived, as currency outside banks dropped by N270.97bn month-on-month to N4.92tn in June, representing a 5.22 per cent decline, the largest monthly contraction within the available six-month dataset. In June, currency outside banks declined by N270.97 billion month-on-month. That single-month contraction marks the largest monthly drop within the available six-month dataset, driving the volume down to its lowest point since late 2025.

Shattering the Eleven-Month Above-Ninety Percent Ratio

For nearly a year, the proportion of cash circulating outside formal institutions remained stubbornly high. June 2026 broke an 11-month streak where currency outside banks persistently exceeded 90 percent of total currency in circulation. According to Nume Ekeghe, cash held outside banking system declined to 89.1 per cent of currency in circulation (CIC) in June 2026, falling below the 90 per cent mark for the first time in 11 months as more cash flowed back into the formal banking system, latest data from the Central Bank of Nigeria (CBN) has shown. In June, that share dropped to 89.11 percent. According to the CBN Money and Credit Statistics, currency outside banks fell by N271 billion to N4.922 trillion in June from N5.193 trillion in May. At the same time, total currency in circulation declined by N167 billion to N5.523 trillion, compared with N5.690 trillion a month earlier. As a result, the share of cash held outside the banking system dropped to 89.1 per cent from 91.3 per cent in May, marking the lowest ratio since July 2025, when cash outside banks accounted for 89.8 per cent of currency in circulation. The latest reading ends a 10-month stretch during which the ratio remained above 90 per cent, suggesting that a larger proportion of cash is once again being retained within the banking system. Conversely, a lower ratio generally reflects stronger banking system liquidity and increased use of formal financial channels.

To put that in perspective, for every N100 circulating in the Nigerian economy during June, approximately N89 remained outside the banking halls, down from roughly N91 in May. The CBN statistics further showed that 89.11 percent of currency in circulation was held outside banks in June, compared with 91.27 percent in May and 94.33 percent in December 2025. This means that for every N100 in circulation, about N89 remained outside the banking system in June. A review of the past year shows that the proportion of cash outside banks remained persistently elevated despite fluctuations in the volume of currency in circulation. The ratio stood at 89.8 per cent in July 2025 before rising to 90.4 per cent in August and 90.1 per cent in September. It increased further to 91.9 per cent in October and 93.3 per cent in November before reaching a one-year high of 94.3 per cent in December 2025, when seasonal cash demand traditionally surges. The ratio subsequently moderated to 91.7 per cent in January 2026 and 90.9 per cent in February. It eased further to 90.0 per cent in April before rising to 91.3 per cent in May and then declining sharply to 89.1 per cent in June. The trajectory of currency in circulation also reflected changing liquidity conditions over the period. At the peak of seasonal cash demand in December 2025, 94.33 percent of all currency sat outside formal channels, leaving a meager 5.67 percent inside financial institutions. By June 2026, the share of cash retained within the banking system nearly doubled to 10.89 percent, pointing to improving liquidity and enhanced utilization of electronic banking platforms.

Cardoso’s Payments System Vision and the Push for Digital Inclusion

The broader decline in physical cash coincides with aggressive regulatory initiatives aimed at modernizing Nigeria’s financial grid. Cash held outside Nigeria’s banking system has declined to its lowest level in seven months in June 2026, reflecting a gradual return of physical currency to deposit money banks amid the Central Bank of Nigeria’s efforts to deepen digital payments. The decline comes as the apex bank continues to promote electronic payments and financial inclusion as part of efforts to reduce the economy’s dependence on cash transactions.

Despite the rapid expansion of instant payment apps, fintech platforms, and agent banking networks, cash retains a formidable footprint across retail trade, rural commerce, and informal markets. However, the June liquidity figures demonstrate that formal financial channels are slowly clawing back physical currency, aligning with the central bank’s long-term digital transformation mandate.