Cash held outside the banking system fell to N4.45tn in August 2025, the lowest level recorded this year, according to a recent survey using data from the Central Bank of Nigeria’s Money and Credit Statistics and TRACE.
The figure declined by N41.1bn from N4.49tn in June 2025, and by N180bn from the year’s peak of N4.63tn in May 2025. Total currency in circulation stood at N4.92tn, meaning over 90 percent of all cash issued by the CBN was held outside the banking system.
In January 2025, cash outside banks was N4.74tn, or 90.5 percent of N5.24tn in circulation. February dropped to N4.52tn, while March rose to N4.60tn. April recorded N4.57tn, May marked the yearly high of N4.63tn, June slipped to N4.49tn, and August fell further to N4.45tn. Even at its lowest point, more than nine out of every ten naira in circulation remained outside banks.
On a yearly comparison, August 2025’s N4.45tn represents an increase of N585bn from N3.87tn recorded in August 2024. Total currency in circulation also rose from N4.14tn to N4.92tn, an increase of 18.8 percent.
Between January and August 2025, the average cash outside banks stood at N4.57tn, compared to N3.62tn in the same period of 2024, indicating a sharp rise in overall liquidity. While the ratio of cash outside banks has declined slightly from 92.4 percent to 90.8 percent, the volume of cash has grown significantly.
The Central Bank has maintained the Monetary Policy Rate at 27.50 percent through most of 2025 to curb inflation and stabilize the exchange rate. However, in September 2025, it cut the rate slightly to 27 percent, citing easing inflation at 20.12 percent and the need to stimulate growth.
The Cash Reserve Ratio for commercial banks was also reduced from 50 percent to 45 percent, while the ratio for public sector deposits rose to 75 percent. The move followed concerns that excess liquidity, fueled by monthly FAAC allocations, could undermine price stability.
CBN Governor Olayemi Cardoso said the bank would continue to monitor fiscal injections closely, adding, “We are a bit concerned about excess liquidity and the negative effects of FAAC releases. We will continue to deploy tools to ensure stability stays with us into the future.”
