The amount of cash held outside Nigeria’s banking system has fallen to a seven-month low, according to the latest data from the Central Bank of Nigeria (CBN), indicating that more individuals and businesses are depositing money with financial institutions. Economists say the trend could strengthen liquidity in the banking sector, giving banks greater capacity to support lending and other financial activities while improving the effectiveness of monetary policy.
Currency outside banks refers to physical cash held by households and businesses rather than money deposited in licensed financial institutions. Analysts say the decline reflects growing use of electronic payment platforms, mobile banking and other digital financial services, alongside ongoing efforts by the CBN to encourage a cash-lite economy and expand financial inclusion. More cash within the banking system also allows the central bank to better manage money supply and inflation.
The development comes as Nigeria continues to modernize its financial sector through digital banking reforms and wider access to electronic payment services. Similar trends are being seen globally as countries promote cashless transactions to improve financial transparency, reduce the risks associated with large volumes of physical cash and make payments more efficient. Experts note, however, that cash remains essential in many rural communities where access to banking services and digital infrastructure is still limited.
Business groups and financial analysts have welcomed the latest figures, saying they point to improving confidence in the formal banking system. They add that sustaining the trend will require continued investment in secure digital payment systems, expanded banking access and stable economic policies to ensure more Nigerians and businesses can participate fully in the country’s evolving financial sector
