Nigeria’s banking sector recorded a significant milestone in June 2026 as cash held outside banks dropped to N4.92 trillion, the lowest level seen in seven months. Fresh data released by the Central Bank of Nigeria (CBN) revealed that currency outside the banking system declined by N485.80 billion, or 8.98%, from N5.41 trillion recorded at the end of December 2025. The development points to a gradual return of physical cash into commercial banks, reflecting the growing impact of the CBN’s drive toward a more digital and cash-efficient economy.
While the amount of cash outside banks recorded a sharp decline, the total currency in circulation experienced only a modest drop. Currency in circulation fell from N5.73 trillion in December 2025 to N5.52 trillion in June 2026, representing a 3.66% decrease. This suggests that rather than disappearing from circulation, more cash is being deposited back into banks, strengthening liquidity within the formal financial system and supporting financial inclusion efforts.
The journey to June’s record low was not entirely smooth. Cash outside banks steadily declined from January through April before recording a temporary increase in May. However, that rise proved short-lived as June witnessed the biggest monthly decline in the available data, with currency outside banks falling by N270.97 billion, representing a 5.22% month-on-month contraction. Analysts believe the sharp drop reflects growing confidence in banking channels and increased use of digital payment platforms across the country.
Despite the improvement, Nigeria remains heavily dependent on cash. The latest figures show that 89.11% of all currency in circulation was still held outside banks in June 2026. Although this represents an improvement from 94.33% recorded in December 2025, it means nearly nine out of every ten naira in circulation remains outside the formal banking system. The trend highlights the continued dominance of cash transactions, especially within the informal sector, rural communities, transportation, and everyday retail businesses.
The Central Bank of Nigeria is determined to change that narrative. Speaking during the launch of the Nigeria Payment System Vision (PSV) 2028, CBN Governor Olayemi Cardoso reaffirmed the apex bank’s commitment to accelerating digital payments and reducing dependence on physical cash. The initiative targets reducing cash outside banks to below 40% of total currency in circulation while deploying more than 10 million QR-code and tap-to-pay acceptance points across markets, transport hubs, commercial centers, and rural communities. If successfully implemented, the strategy could reshape Nigeria’s payment ecosystem, deepen financial inclusion, and accelerate the country’s transition into a modern digital economy.
source: nairametrics
