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Cash held outside Nigeria’s banking system fell sharply to a seven-month low in June, with more physical currency returning to commercial banks as the amount outside the banking sector.
Latest Money and Credit Statistics update by the Central Bank of Nigeria (CBN) showed that currency outside banks declined by N270.97 billion to N4.92 trillion in June 2026 from N5.19 trillion in May, representing a 5.22 per cent month-on-month decline.
The June figure is the lowest level recorded since November 2025, when cash outside banks stood at N4.91 trillion.
The latest figures suggest that more physical cash is gradually returning to the banking system as the CBN continues efforts to deepen digital payments and reduce reliance on cash transactions.
The trend also reflects a broader decline in cash held outside banks during the first half of the year. From N5.41 trillion in December 2025, currency outside banks fell by N485.80 billion, or 8.98 per cent, by June 2026.
While cash outside banks recorded a sharp decline, the overall volume of currency in circulation fell at a slower pace. Total currency in circulation dropped from N5.73 trillion in December 2025 to N5.52 trillion in June 2026, representing a decline of N209.56 billion or 3.66 per cent.
The movement, however, was not consistent throughout the six months.
Currency outside banks fell from N5.41 trillion in December to N5.25 trillion in January before easing further to N5.19 trillion in February. Although the CBN data did not provide figures for March, the amount declined further to N5.08 trillion in April.
The downward trend was briefly interrupted in May when currency outside banks rose to N5.19 trillion, an increase of N109.34 billion or 2.15 per cent from April. The increase was short-lived as the amount declined by N270.97 billion in June, marking the largest monthly drop recorded within the available dataset.
The CBN data also showed an improvement in the proportion of cash retained within the banking system.
According to the figures, 89.11 per cent of all currency in circulation was held outside banks in June, compared with 91.27 per cent in May. This means that out of every N100 in circulation, about N89.11 was held outside banks in June, down from N91.27 a month earlier.
The 2.16 percentage point month-on-month decline indicates that a greater share of physical cash returned to banks during June.
Compared with June 2025, the ratio also eased from 89.74 per cent to 89.11 per cent, suggesting gradual improvement in formal cash intermediation despite the large volume of cash still circulating outside the banking system.
The figures also show a marked shift from the position at the end of last year. In December 2025, 94.33 per cent of all currency in circulation was held outside banks, leaving only 5.67 per cent circulating in the banking system.
By June 2026, the share of currency outside banks had declined to 89.11 per cent, while the proportion of cash retained within banks almost doubled to 10.89 per cent.
Despite the improvement, the data underscore Nigeria’s continued dependence on cash, with nearly nine out of every 10 naira in circulation still held outside the banking system, highlighting the dominant role of physical cash, particularly within the informal economy.
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