Currency Outside Banks, Currency in Circulation Decline by 3.66%, 0.03%

Nume Ekeghe

Currency outside the banking system and total currency in circulation recorded marginal declines in January 2026, reflecting a moderation in cash demand after the seasonal surge associated with year-end spending.

Latest money and credit statistics released by the Central Bank of Nigeria (CBN) showed that currency outside banks fell by 3.66 per cent to N5.21 trillion in January 2026, from N5.41 trillion recorded in December 2025.

Similarly, currency in circulation declined slightly by 0.03 per cent to N5.73 trillion in January 2026, compared with N5.73 trillion in December 2025, suggesting that overall liquidity conditions in the economy remained broadly stable despite the post-festive adjustment.

The figures indicate that cash held outside the banking system continues to dominate Nigeria’s monetary landscape, underscoring the country’s persistent dependence on physical cash for transactions, particularly within the informal sector.

The decline in January followed the typical seasonal pattern in which currency demand rises sharply during the festive period and eases at the beginning of a new year as consumer spending slows and households as well as businesses return excess cash to the banking system.

A review of currency held outside the banking system over the past year shows a fluctuating but generally elevated trend. In December 2025, currency outside banks rose sharply to N5.41 trillion, reflecting the year-end liquidity build-up driven by festive spending, increased retail transactions and higher cash withdrawals by households and businesses.

Prior to the December spike, cash outside banks stood at N4.91 trillion in November 2025, compared with N4.65 trillion in October, reflecting a gradual accumulation of cash toward the close of the year.

Earlier in the second half of 2025, currency outside banks showed a mixed trajectory. It stood at N4.46 trillion in August 2025, after moderating slightly to N4.42 trillion in July, while June recorded N4.49 trillion and May stood at N4.63 trillion, suggesting intermittent adjustments in cash demand amid evolving economic conditions.

In the first quarter of 2025, cash holdings outside the banking system remained relatively stable but elevated. Currency outside banks stood at N4.57 trillion in April, N4.60 trillion in March, and N4.51 trillion in February, before settling at N4.74 trillion in January 2025.

At the end of 2024, currency outside banks recorded a sharp jump, rising from N4.65 trillion in November 2024 to N5.13 trillion in December 2024, reflecting the traditional year-end increase in cash demand driven by festive spending, informal sector transactions and higher withdrawals by households and businesses.

A similar seasonal pattern was observed in total currency in circulation over the past year. In January 2026, currency in circulation stood at N5.731 trillion, slightly lower than the N5.732 trillion recorded in December 2025, indicating a marginal moderation in overall liquidity.