Cash held outside Nigeria’s banking system fell to N4.45 trillion in August 2025, marking the lowest level recorded so far this year, according to data from the Central Bank of Nigeria (CBN) in its Money and Credit Statistics report. This represents a decline of N41.1 billion (0.9%) from N4.49 trillion in June, and a N180 billion (3.9%) drop from the year’s peak of N4.63 trillion in May 2025.
Total currency in circulation during August stood at N4.92 trillion, indicating that 90.5% of all cash issued by the CBN remained outside the formal banking system. The data highlights a persistent trend of high cash retention outside banks despite modest fluctuations throughout the year.
In January 2025, cash outside banks was N4.74 trillion, representing 90.5% of total circulation. February saw a decrease to N4.52 trillion (89.6%), before rising again in March to N4.60 trillion (91.9%). April and May recorded N4.57 trillion (91.1%) and N4.63 trillion (92.4%) respectively, followed by a steady decline through June and August.
Despite the reduction, the figures show that more than nine out of every ten naira in circulation still lies outside bank vaults. On a year-on-year basis, the total amount of cash held outside banks increased sharply from N3.87 trillion in August 2024, representing a 15.1% rise (N585 billion). Currency in circulation also rose by 18.8%, from N4.14 trillion to N4.92 trillion within the same period.
A comparison between the beginning of both years underscores the scale of the increase. In January 2024, cash outside banks stood at N3.28 trillion, whereas by January 2025, it had jumped by 44.5% to N4.74 trillion. Monthly comparisons further reveal that each month in 2025 surpassed corresponding 2024 levels by at least N585 billion, and in some months by over N1 trillion.
The ratio of cash outside banks to total currency in circulation, though slightly improved, remains elevated. In August 2024, the ratio was 93.3%, compared to 90.5% in August 2025. This suggests that while the CBN has succeeded in marginally reducing the proportion of cash held outside banks, the absolute value of such funds has grown significantly.
Between January and August 2025, an average of 90.8% of all cash in circulation was held outside banks, compared to 92.4% during the same period in 2024. The average stock of cash outside banks in 2025 reached N4.57 trillion, up from N3.62 trillion in 2024,a N1.55 trillion increase.
These figures carry critical implications for monetary policy. Throughout most of 2025, the CBN kept the Monetary Policy Rate (MPR) at 27.5% to combat inflation and stabilise the naira. The decline in August may signal early results from tighter liquidity control and a gradual shift toward digital payment systems.
In September 2025, the Monetary Policy Committee (MPC) executed its first rate cut since 2020, lowering the MPR to 27%, citing easing inflation (20.12% in August) and a need to spur growth. The committee also reduced the Cash Reserve Ratio (CRR) for banks from 50% to 45%, while tightening rules for public sector deposits to 75%.
CBN Governor Olayemi Cardoso noted that FAAC disbursements were contributing to excess liquidity, cautioning that unchecked inflows could undermine price and exchange rate stability. He reaffirmed the bank’s commitment to using policy tools to preserve recent gains in disinflation and market stability.
