The Central Bank of Nigeria (CBN) has revealed that a total of N923.16 billion was
withdrawn from the banking system between May 2024 and May 2025. This disclosure,
detailed in the apex bank’s latest Money and Credit Statistics report, reflects a notable shift
in public behavior toward holding more cash outside of formal banking channels.
According to the data, the volume of currency held outside banks stood at N4.63 trillion as of May 2025, rising from N4.57 trillion recorded in April 2025. This represents a 1.42% increase on a month-to-month basis. More significantly, when compared to May 2024, the figure surged by 25%, up from N3.71 trillion. This sharp year-on-year rise underscores a growing preference among Nigerians to keep cash in hand rather than in the banking system.
The total currency in circulation which includes both cash held in banks and currency outside the banks was recorded at N5.01 trillion as of May 2025. The data suggests that the bulk of the country’s physical cash is now being retained outside the formal banking system, a trend that may raise concerns for monetary policy management and financial system stability.
Analysts note that such large-scale withdrawals and the increasing volume of cash outside
the banking sector could be linked to several factors, including reduced trust in the banking system, inflationary pressures, economic uncertainty, or a preference for cash-based transactions, particularly in informal sectors of the economy.
The N923.16 billion withdrawal over the 12-month period is being interpreted as a reflection
of this ongoing shift in financial behavior. It points to a broader trend where more individuals and businesses are opting to store value in physical cash, possibly to avoid perceived banking charges, access restrictions, or as a hedge against currency depreciation.
This pattern could also have implications for the effectiveness of the CBN’s monetary
policies. When large amounts of cash are held outside the banking system, it reduces the
central bank’s ability to monitor and control money supply, potentially complicating inflation
control and efforts to stabilize the economy.
The CBN had in the past implemented cashless policies and currency redesign efforts in an
attempt to curb excess cash circulation and promote digital transactions. However, the
recent figures suggest that the desired shift toward a more digitized, traceable financial
system is facing significant resistance or challenges.
As the economy continues to navigate post-reform adjustments and grapple with issues like high inflation, currency volatility, and limited credit access, the trend of withdrawing and holding cash outside the formal banking sector may persist unless structural issues are
addressed. This includes improving confidence in the banking sector, expanding financial
inclusion, and strengthening digital payment infrastructure across the country.
The data reveals a negligible month-on-month decline of just 0.0002% in the volume of
currency held outside banks. However, on a year-on-year basis, there was a significant
increase of 26.45%, rising from N3.97 trillion in May 2024. This sharp annual growth
highlights the increasing demand for cash within the Nigerian economy.
As of May 2025, currency held outside banks accounted for 92.4% of the total currency in
circulation a slight drop from 93.8% recorded in April 2025. This marginal shift suggests a
small movement toward keeping more cash within the banking system. In May 2024, the
figure stood at 93.5%, further emphasizing that despite minor fluctuations, cash held outside banks continues to dominate.
This enduring trend reflects a sustained preference for physical cash over digital or bank-
based transactions. Analysts attribute this to a range of possible factors, including economic uncertainty, limited confidence in the banking system, and a cultural or practical inclination toward cash-based dealings particularly within the informal sector. These dynamics continue to shape Nigeria’s financial landscape, presenting ongoing challenges for financial inclusion and digital banking adoption.
