Cash held outside Nigeria’s banking system has declined to its lowest level in seven months in June 2026, reflecting a gradual return of physical currency to deposit money banks amid the Central Bank of Nigeria’s efforts to deepen digital payments.

The latest Money and Credit Statistics released by the CBN showed that currency outside banks fell to N4.92tn in June from N5.19tn in May. An analysis of the data by The PUNCH showed that cash held outside banks dropped by N485.80bn, or 8.98 per cent, from N5.41tn recorded in December 2025 to N4.92tn in June 2026.

The June figure represents the lowest level since November 2025, when currency outside banks stood at N4.91tn. The decline comes as the apex bank continues to promote electronic payments and financial inclusion as part of efforts to reduce the economy’s dependence on cash transactions.

The CBN data also showed that total currency in circulation declined from N5.73tn in December 2025 to N5.52tn in June 2026, representing a decrease of N209.56bn, or 3.66 per cent.

The sharper decline in cash outside banks, compared with the reduction in total currency in circulation, suggests that a larger proportion of physical cash was returned to the banking system rather than withdrawn permanently from circulation.

The movement, however, was not consistent throughout the period. Currency outside banks declined from N5.41tn in December to N5.25tn in January before easing further to N5.19tn in February. Although the CBN did not publish data for March 2026, the figure fell to N5.08tn in April.

The trend briefly reversed in May, when cash outside banks increased to N5.19tn from N5.08tn in April, reflecting a rise of N109.34bn, or 2.15 per cent.

The increase proved short-lived, as currency outside banks dropped by N270.97bn month-on-month to N4.92tn in June, representing a 5.22 per cent decline, the largest monthly contraction within the available six-month dataset.

Further analysis showed that cash outside banks accounted for 89.11 per cent of total currency in circulation in June, compared with 91.27 per cent in May and 89.74 per cent in June 2025.

This indicates that about N89 of every N100 in circulation was held outside the banking system in June, down from roughly N91 a month earlier.

On a monthly basis, the ratio declined by 2.16 percentage points, while it eased by 0.63 percentage points compared with June 2025, suggesting a gradual increase in the share of cash retained within the formal banking system.

The improvement was more pronounced when compared with the end of 2025. In December, 94.33 per cent of currency in circulation was outside banks, leaving only 5.67 per cent within the banking system.

By June 2026, the proportion of currency outside banks had declined to 89.11 per cent, while the share held within banks rose to 10.89 per cent. The figures suggest that although Nigeria remains heavily reliant on cash, a larger share of physical currency is gradually flowing back into the banking system.

Cash continues to dominate transactions across retail markets, transportation, rural communities and the informal sector despite the rapid expansion of instant payment platforms, mobile banking, fintech services and agent banking networks.

The PUNCH earlier reported that the Central Bank of Nigeria unveiled an ambitious plan to bring cash held outside the banking system into formal financial channels and expand financial inclusion by onboarding 50 million additional Nigerians by 2028.

The targets form part of the Nigeria Payments System Vision 2028 unveiled by the Governor of the Central Bank of Nigeria, Olayemi Cardoso, in Abuja, as the apex bank seeks to deepen digital payments, strengthen trust in financial services, reduce cash dependence and position Nigeria as a leading payments hub in Africa.

Cardoso disclosed that the apex bank intends to reduce cash outside the banking system to less than 40 per cent of money in circulation by 2028. “I would like to see a situation where we will reduce cash outside the banking system to less than 40 per cent of money in circulation,” he said.

Such a shift could significantly improve monetary policy transmission, increase banking sector liquidity, enhance financial intermediation and strengthen lenders’ ability to support economic activity.