Nigeria’s Currency Outside Banks Hits ₦5.4 Trillion

Nigeria’s currency outside the banking system closed 2025 at a record high of ₦5.4 trillion, highlighting a sharp increase in the amount of physical cash held by individuals and businesses across the country, despite years of policy efforts aimed at promoting a cashless economy.

According to money supply data released by the Central Bank of Nigeria (CBN), the surge in cash held outside banks occurred alongside a broader expansion in overall liquidity conditions. Total money supply in the economy rose to approximately ₦124.4 trillion by the end of 2025, raising renewed concerns about the effectiveness of Nigeria’s cashless policy framework.

READ ALSO: Nigeria, Türkiye Set for Fresh Strategic Talks as Tinubu Visits

The data show that the total currency in circulation climbed to an all-time high of approximately ₦5.7 trillion in December 2025, indicating that nearly all physical cash issued by the CBN remained outside the formal banking system. This represents the highest level of currency outside banks ever recorded, surpassing the previous peak of ₦5.125 trillion in December 2024.

Currency outside banks typically rises toward the end of the year as cash demand increases during the festive season. However, the sustained upward trend throughout 2025 suggests a deeper structural preference for cash. On average, currency held outside banks stood at around ₦4.5 trillion during the year, before accelerating sharply in the final months.

The persistent dominance of cash comes despite rapid growth in electronic payments and digital banking platforms. While digital transaction volumes have expanded significantly over the past five years, cash continues to play a central role in everyday transactions, particularly in informal markets, rural communities, and among small businesses.

The current trend marks a clear shift from the policy stance adopted under the previous CBN leadership, which aggressively restricted cash supply, especially during the naira redesign programme in early 2023. That policy led to a historic low in currency outside banks, falling to ₦792.1 billion, but triggered widespread economic disruption and public backlash.

Under the current CBN Governor, Yemi Cardoso, the apex bank has adopted a more orthodox monetary policy approach, prioritising price stability and liquidity management while maintaining support for digital financial inclusion. However, analysts note that high levels of cash outside the banking system can weaken monetary policy transmission and complicate inflation control efforts.

The surge in physical cash has also contributed to the rapid expansion of agency banking and Point-of-Sale (PoS) operations nationwide, turning cash distribution into a profitable but increasingly regulated business. As Nigeria balances financial inclusion goals with monetary stability, the continued dominance of cash underscores the complex realities shaping the country’s payments ecosystem.