Currency Outside Banks Tapers to N4.49trn, Now 90% of Cash in Circulation

Nume Ekeghe

Currency outside the formal banking system moderated to N4.49 trillion in June 2025, down from N4.63 trillion in May, though it continued to dominate overall liquidity by accounting for about 90 per cent of total circulation.

Currency in circulation (CIC) closed the month at N5.01 trillion, marginally higher than N5.00 trillion recorded in the previous month, according to the latest Central Bank of Nigeria (CBN) data. The pullback marks the first notable easing in two months, following a steady rise in cash supply. Over the past year, cash outside banks (CoB) had maintained an upward trajectory, climbing from N3.79 trillion in June 2024 to a peak of N5.13 trillion in December 2024, driven largely by festive spending. From July through November, out-of-bank currency expanded consistently—rising from N3.66 trillion in July to N4.02 trillion in September and N4.65 trillion in November underscoring the persistent reliance on cash in the economy.

The trend shifted at the turn of 2025 as liquidity conditions began to adjust. In January, CoB eased to N4.74 trillion before declining further to N4.52 trillion in February. It steadied at N4.57 trillion in April and edged up again to N4.63 trillion in May, before tapering to N4.49 trillion in June. Despite the moderation, the figure remained 18.6 per cent higher year-on-year, highlighting the scale of unbanked liquidity and its implications for monetary policy effectiveness.

A closer look at CIC trends reveals a cycle of seasonal expansion, sharp year-end spikes, and gradual correction. Total CIC stood at N4.05 trillion in June 2024, with N3.79 trillion, over 93 per cent held outside banks. The ratio hovered above 90 per cent throughout the second half of the year, peaking in December when CIC surged to N5.44 trillion, with N5.13 trillion circulating outside the formal system. By early 2025, the pattern reversed as post-holiday withdrawals tapered, with CIC falling to N5.24 trillion in January and further to N5.03 trillion in February, before stabilising around N5.0 trillion through April, May, and June.

On a year-on-year basis, June 2025 reflects a 24 per cent increase in total currency in circulation compared with June 2024, alongside an 18.6 per cent rise in currency outside banks.