Nigerians held N4.47 trillion in money exterior the banking system in September 2025, regardless of a contraction in general cash provide, in line with the Central Bank of Nigeria’s newest cash and credit score statistics.
The info present that broad cash provide (M3) fell to N117.78 trillion in September from N119.69 trillion in August, representing a decline of N1.91 trillion or 1.6% month-on-month.
In distinction, money exterior banks rose marginally by N14.7 billion, or 0.3%, throughout the identical interval.
On a yearly foundation, cash provide rose by 7.6%, climbing from N109.41 trillion in September 2024. Nonetheless, money exterior banks expanded even sooner, rising by 11.2% from N4.02 trillion in the identical month final yr. The widening hole exhibits that Nigerians are more and more holding bodily cash moderately than holding it in deposit accounts.
Over 90% of Nigeria’s money is exterior banks
Forex in circulation refers back to the complete money issued by the CBN and accessible to the general public. In September 2025, complete foreign money in circulation stood at N4.95 trillion. Of this quantity, N4.47 trillion was held exterior banks, accounting for 90.2% of the overall. Which means solely about 9.8% of the overall money inventory was retained in bank vaults.
- The proportion has remained largely unchanged in current months. In August 2025, money exterior banks accounted for 90.3% of circulation, whereas in September 2024 the determine was 93.2%.
- Though the ratio has narrowed barely year-on-year, absolutely the quantity of hoarded money has elevated considerably by nearly N450 billion in twelve months.
This persistent reliance on bodily cash displays structural weaknesses in Nigeria’s monetary system. It might be as a consequence of excessive transaction prices, mistrust within the banking sector, restricted penetration of digital platforms, and the dominance of casual financial exercise as explanation why a lot money stays exterior banks.
Money hoarding patterns by means of 2025
The month-to-month trajectory of money exterior banks all through 2025 highlights the stubbornness of the pattern. In January, Nigerians held N4.74 trillion, representing 90.4% of the N5.24 trillion in circulation on the time. February noticed a decline to N4.52 trillion, or 89.7%, earlier than the determine rebounded in March to N4.60 trillion.
- In April, money exterior banks dropped barely to N4.57 trillion, but it surely surged once more to N4.63 trillion in Could, the best stage recorded up to now in 2025.
- The determine fell to N4.49 trillion in June, slipped additional to N4.45 trillion in August, after which climbed again as much as N4.47 trillion in September.
This volatility in absolute figures has not shifted the underlying actuality: over nine-tenths of foreign money in circulation continues to sit down exterior the formal banking system. The info underline that money hoarding is pushed much less by liquidity adjustments and extra by entrenched behavioural and structural preferences.
What you need to know
The September figures had been launched barely over a month after the CBN made a historic transfer by chopping the Financial Coverage Fee by 50 foundation factors to 27.0%, its first discount in 5 years. The speed reduce was aimed toward easing borrowing prices, but it surely was paired with liquidity-tightening measures, together with inserting the Money Reserve Requirement for business banks at 45% and imposing a 75% reserve ratio on non-TSA public sector deposits.
The mix of those insurance policies meant that whereas rates of interest fell marginally, the flexibility of banks to increase credit score was restricted. This will have contributed to the continued rise in money held exterior banks, as households and companies opted to maintain funds in liquid type moderately than place them in deposits topic to larger prices and restricted returns.
Nonetheless, there’s a danger of excessive ranges of money exterior banks lowering the effectiveness of financial coverage. They weaken the transmission of rate of interest changes, gas the casual financial system, and constrain tax assortment. For the CBN, the information present that even with tighter financial management, behavioural and structural components are holding money hoarding elevated.
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