Currency held outside Nigeria’s banking system declined for the second time in 2025, falling to N4.57 trillion in April from N4.60 trillion in March, according to new data from the Central Bank of Nigeria (CBN).
This renewed decline comes amid the apex bank’s continued hold on its benchmark Monetary Policy Rate (MPR) at 27.5%, a decision made during its May 2025 Monetary Policy Committee (MPC) meeting.
Although the April figure still represents a 26.8% year-on-year rise compared to the N3.61 trillion recorded in April 2024, the month-on-month decline of N26.4 billion is marginally significant.
It marks a return to the downward path seen earlier in the year and reinforces subtle shifts in Nigeria’s cash management dynamics, possibly in response to monetary tightening and increasing adoption of digital financial channels.
The downturn in currency outside banks began following the December 2024 festive season, when the figure peaked at N5.13 trillion, the highest level recorded ever. This seasonal surge, typical for year-end transactions, was quickly followed by a sharp decline in January 2025 to N4.74 trillion.
The decline in cash held outside the formal banking system appears to align with this cooling inflation trend. As money growth slows and excess liquidity is reined in, demand-side pressures could subside further, allowing the CBN to maintain its hawkish stance without additional tightening for now.
The reduced availability of physical cash, especially outside the banking system, may also reflect the public’s sensitivity to interest rate conditions and the rising cost of cash-based transactions.
Still, challenges remain. The dominance of cash outside banks, over 91%, is still one of the highest globally and poses a real hurdle to monetary policy effectiveness, fiscal traceability, and anti-corruption enforcement. Unless this number continues to trend downward over several quarters, its policy significance remains limited.