Currency outside bank further rises to N4.6 trillion in March 2025

• Currency outside the banking system further rose to N4.6 trillion in March 2025
• The trend of increase in currency outside the formal banking system was maintained throughout the first quarter of 2025
• Liquidity surge comes amid soaring inflation and a surge in digital transactions

The latest money and credit statistics released by the Central Bank of Nigeria (CBN) has revealed that the value of currency outside Nigeria’s banking system has further increased to N4.6 trillion in March 2025.

This represents 91.9 per cent of the N5.00 trillion total currency in circulation during the period, indicating a high dependence on physical cash in the country despite the government’s push for a cashless economy.

The amount outside the banking system in March 2025 is significant compared to March 2024, when currency outside bank was N3.63 trillion out of the N3.87 trillion in circulation.

The March 2025 figures indicate a 26.7 per cent year-on-year increase in currency held outside banks and a 29.3 per cent rise in total currency in circulation.

On a month-on-month basis, currency outside banks increased from N4.52 trillion in February 2025 to N4.60 trillion, even as total currency in circulation declined from N5.04 trillion in February to N5.00 trillion.

This indicates that the percentage of currency outside the banking system rose to 91.9 per cent in March, the highest level in five months.

Surge in currency outside bank maintained in Q1 2025

The trend of increase in currency outside the banking system was maintained throughout the first quarter of 2025.

In January 2025, currency outside bank stood at N4.74 trillion, which is 90.5 per cent of the N5.24 trillion in circulation.

The proportion of currency outside bank, however, declined to N4.52 trillion in February, representing 89.6 per cent of the N5.04 trillion of total currency in circulation, before increasing in March.

Liquidity surge comes amid soaring inflation, digital transaction growth

The increase in the circulation of cash comes amid a rise in the inflation rate, which reached 24.23 per cent in March 2025, a 3.90 per cent month-on-month increase from the 23.18 per cent recorded in February 2025, according to the National Bureau of Statistics (NBS).

A high inflationary environment often triggers the tendency for citizens to keep cash in hand to meet immediate needs, especially where price volatility is high and access to banking infrastructure is unreliable.

This is particularly evident in rural and peri-urban areas, as well as among informal businesses, traders, and low-income households that transact largely in cash.

The liquidity surge also follows a growth in digital transactions, with electronic payment reaching an all-time high of N1.07 quadrillion in 2024, the first time it would hit the quadrillion mark.

The Inter-Bank Settlement System (NIBSS) said the value recorded on the NIBSS Instant Payment (NIP) represents a 79.6 per cent increase over the N600 trillion recorded in 2023.

MPC to deliberate on liquidity management at May meeting

The rise in currency outside banks will form part of the deliberations of the Monetary Policy Committee (MPC) meeting of the CBN scheduled to hold on May 19 and 20, 2025.

With increased liquidity comes a challenge for monetary policy implementation, weakening the effectiveness of traditional liquidity management tools, such as interest rate adjustments and open market operations.

The MPC voted to hold all monetary policy parameters at its last meeting in February. However, the rise in inflation and currency outside banks may force the committee to adopt a hawkish stance in May.

CBN says 94.3% of currency in circulation outside banks in October 2024

Meanwhile, TheRadar earlier reported that the Central Bank of Nigeria (CBN) said 94.3 per cent of the currency in circulation was outside the banking system in October 2024, despite a year-on-year increase of N1.59 trillion in the amount of currency held outside banks.

According to CBN’s Money and Credit Statistics, cash outside banks reached N4.29 trillion in October 2024, representing 94.3 per cent of the total of N4.55 trillion currency in circulation.