Cash held outside the banking system fell to N4.45tn in August 2025, the lowest level recorded so far this year, according to data from the Central Bank of Nigeria’s Money and Credit Statistics.

The figure declined by N41.1bn (0.9 per cent) from N4.49tn in June 2025, and by N180bn (3.9 per cent) from the year’s peak of N4.63tn in May 2025.

In August, total currency in circulation stood at N4.92tn, meaning 90.5 per cent of all cash issued by the CBN was held outside the banking system.

The 2025 trend shows persistent fluctuations but consistently high ratios. In January, cash outside banks stood at N4.74tn, representing 90.5 per cent of N5.24tn in circulation.

February dropped to N4.52tn (89.6 per cent), before March rose to N4.60tn (91.9 per cent).

April recorded N4.57tn (91.1 per cent), while May marked the yearly high of N4.63tn (92.4 per cent) of N5.01tn.

June slipped to N4.49tn (89.8 per cent), and by August it fell further to N4.45tn (90.5 per cent).

Even at its lowest point, more than nine out of every ten naira in circulation remained outside banks.

On a year-on-year basis, the rise has been steep. In August 2024, cash outside banks was N3.87tn, meaning the August 2025 level was higher by N585bn (15.1 per cent).

Currency in circulation also rose from N4.14tn to N4.92tn over the same period, an increase of N778bn (18.8 per cent).

The difference is more pronounced when comparing the start of both years. In January 2024, N3.28tn was outside banks, whereas by January 2025, the figure had surged to N4.74tn, a rise of N1.46tn (44.5 per cent).

Month-by-month comparisons show that 2025 has consistently outpaced 2024 by wide margins.

February 2025’s N4.52tn was N1.11tn higher than February 2024’s N3.41tn. March showed a gap of almost N1tn, April by N963bn, May by N923bn, June by N704bn, July by N829bn, and August by N585bn.

In each month, cash outside banks in 2025 exceeded 2024 levels by at least N585bn, and in some cases by more than N1.4tn.


The ratio of cash outside banks to total circulation highlights the challenge. In August 2024, 93.3 per cent of cash was outside banks, compared to 90.5 per cent in August 2025.

While the ratio is slightly lower, the absolute value in 2025 is far higher. On average, between January and August 2025, 90.8 per cent of all cash issued was outside the banking system, compared with 92.4 per cent in the same period of 2024.

This suggests the CBN has marginally reduced the proportion of cash outside banks, but at the cost of a much larger total base.

The average stock of cash outside banks between January and August 2025 stood at N4.57tn, almost N1.55tn higher than the N3.62tn average during the same period of 2024.

These figures have significant implications for the Central Bank’s monetary tightening policy.

For most of 2025, the CBN maintained the Monetary Policy Rate at 27.50 per cent as part of efforts to curb inflation and stabilise the exchange rate.

The August decline may indicate early effects of tighter cash management and growing digital payment adoption. However, the data shows that excess liquidity remains entrenched, with more than nine in every ten naira circulating outside bank vaults.


In September 2025, the Monetary Policy Committee implemented its first rate cut since 2020, reducing the policy rate to 27 per cent, citing easing inflation, which stood at 20.12 per cent in August, and the need to stimulate growth.

The committee also lowered the Cash Reserve Ratio for commercial banks from 50 per cent to 45 per cent, while tightening rules on public sector deposits by raising their reserve ratio to 75 per cent.

Further analysis by The PUNCH shows that Nigeria’s rate cut is not an isolated move. Across the continent, central banks are beginning to ease monetary policy in response to slowing inflation.

Recently, Ghana slashed its policy rate by 350 basis points to 21.5 per cent, while Kenya trimmed its benchmark rate to 9.5 per cent in mid-August.

Nigeria’s MPR remains one of the highest in Africa, reflecting its elevated inflation pressures. However, the decision to ease, even marginally, signals a shift in strategy from crisis containment to cautious stimulus.

The CBN had earlier expressed concern that monthly allocations from the Federation Account Allocation Committee were fuelling excess liquidity in the banking system, posing risks to price stability.

Speaking after the 302nd MPC meeting in Abuja, Governor Olayemi Cardoso said the CBN was closely monitoring fiscal injections following FAAC disbursements, warning that they could undermine recent gains in disinflation and exchange rate stability.


“We are a bit concerned about excess liquidity and, in particular, the negative effects of FAAC releases at certain times of the month or year. It is something that we are watching very closely, and we will continue to deploy the tools required to ensure that the stability we have attained stays with us into the future,” Cardoso said.