CBN Tightening Cuts Currency Outside Banks To N5.08trn In April

Nigeria’s cash outside the banking system declined to N5.08 trillion in April 2026, extending a steady moderation in physical cash holdings as tighter monetary conditions and improved liquidity management continue to drive funds back into formal financial channels.

Latest data released by the Central Bank of Nigeria showed that currency outside banks (COB) fell to N5.083 trillion in April from N5.19 trillion recorded in February, sustaining the downward trend that began after cash holdings peaked at the close of 2025.

Similarly, currency in circulation (CIC) moderated to N5.646 trillion in April from N5.71 trillion in February, reflecting a slowdown in the growth of physical cash across the economy.

The development signals a gradual return of excess liquidity to the banking system amid sustained monetary tightening by the apex bank, higher fixed-income yields, and aggressive liquidity mop-up measures aimed at curbing inflationary pressures.

Analysts noted that elevated interest rates across the fixed-income market have continued to attract idle funds back into formal banking channels, while the growing adoption of electronic payment platforms is also helping reduce dependence on cash transactions.

The latest decline marks the third consecutive monthly moderation in cash outside banks since December 2025, when COB climbed to a historic high of N5.40 trillion on the back of festive spending, inflation-induced transaction demand, and sustained reliance on physical cash within the informal sector.

Data showed that cash outside banks had eased slightly to N5.21 trillion in January before moderating further to N5.19 trillion in February. With the April figure settling at N5.08 trillion, COB has now declined by over N316 billion from its December peak.

A similar trend was recorded in total currency in circulation. CIC, which stood at N5.73 trillion in January, declined to N5.71 trillion in February before easing further to N5.65 trillion in April.

The moderation reflects the impact of the Central Bank’s tightening measures as authorities intensify efforts to tame inflation, improve monetary policy transmission, and reduce excess liquidity within the financial system.

Despite the recent decline, cash levels across the economy remain historically elevated, underscoring the economy’s deep-rooted dependence on cash transactions, particularly within the informal sector.

On a year-on-year basis, currency outside banks remains significantly above the N4.51 trillion recorded in February 2025, highlighting the persistence of cash-intensive activities despite ongoing efforts to deepen financial inclusion and accelerate digital payment adoption.

A review of the trend over the past year showed that cash outside banks rose steadily throughout 2025 as inflationary pressures and economic uncertainty pushed households and businesses to maintain higher precautionary cash balances.

By the middle of 2025, COB had crossed the N5 trillion threshold for the first time, driven largely by increased transaction demand and rising cash preference within the informal economy.

The surge intensified in the final quarter of the year, culminating in the December peak of N5.40 trillion amid seasonal spending pressures, liquidity injections, and intermittent concerns about the reliability of electronic payments during peak transaction periods.