The amount of cash held outside Nigeria's banking system has increased to N4.87 trillion as of August 2026, according to recent data from the Central Bank of Nigeria. This represents a rise of N70.9 billion or 1.48 per cent from N4.80 trillion recorded in July 2026. The July figure had been an eight-month low. The increase in August follows a substantial decline between May and July when cash outside banks fell from N5.19 trillion to N4.92 trillion and subsequently to N4.80 trillion.
The cumulative reduction in cash outside banks between May and July was about N391.8 billion. Despite the latest increase, the August figure remains N381.3 billion below the N5.25 trillion recorded in January 2026. However, compared to August 2025, cash outside banks has increased by roughly N419 billion or 9.4 per cent. This indicates a year-on-year increase in the amount of cash held outside the banking system.
Financial analyst Tunde Ayileka says that the latest increase in cash outside banks should not be automatically interpreted as a reversal of Nigeria's broader movement towards electronic payments. He noted that monthly movements in currency outside banks can be influenced by various factors, including seasonal cash demand, economic activity, withdrawals by households and businesses, as well as the continued importance of cash transactions in the informal economy.
One important indicator of the relationship between physical cash and the wider money supply is the broad money supply, also known as M3. According to CBN data, M3 rose to N139.38 trillion in August 2026, up 16.4 per cent from N119.69 trillion a year earlier. This indicates continued expansion of liquidity across the wider financial system.
The rise in cash outside banks occurred alongside the continued expansion of liquidity across the wider financial system rather than in isolation. M3 increased by N601.6 billion from N138.78 trillion in July 2026. This suggests that the increase in cash outside banks is part of a larger trend in the country's monetary system.
The Central Bank of Nigeria's monetary data shows that the cash held outside banks had been on a decline for three consecutive months prior to August. The decline was from N5.19 trillion in May to N4.92 trillion in June and N4.80 trillion in July. The August rebound has raised questions about the pace at which Nigerians are shifting from physical cash to digital payments.
The trend in cash outside banks has implications for the country's monetary policy and the development of its financial system. As the country continues to move towards electronic payments, the role of cash in the economy is likely to evolve. The CBN will likely continue to monitor the trend in cash outside banks and adjust its policies accordingly.
Key points
- Cash outside banks in Nigeria rose to N4.87 trillion in August 2026.
- The increase in cash outside banks occurred alongside continued expansion of liquidity across the wider financial system.
- The trend in cash outside banks has implications for Nigeria's monetary policy and financial system development.
