Currency outside the banks hits N4,6 trillion in March 2025

Despite the thrust of the government for a company without cash, the Nigerians continue to encourage physical liquidity, with the value of the currency detained outside the banking system that rises to N4,6 trillion of N4.6 trillion in March 2025, which is explained for an overwhelming 91.9% of the total currency in circulation.

This increase marks an increase of 26.7% compared to the previous year and underlines the profound dependence on money in an economy in which electronic payment alternatives must still fully capture trust and use.

The latest figures of the Nigeria Central Bank (CBN) highlight a clear contrast with the push of the nation for a more digital economy.

While the total currency in circulation has grown up to N5.00 trillion, most remain outside of formal bank channels, further complicating the government -free political ambitions.

This persistence of cash domain is more pronounced in the informal economy, which constitutes over 50% of Nigeria GDP.

In rural and peri-urban areas, where access to bank infrastructures is often limited and digital literacy is still evolving, preference for the physical case persists.

Trader, small businesses and low -income families, who work largely in cash, face further challenges such as inflation, the faults of the network and unreliable banking systems.

In March 2025, the inflation rate of Nigeria rose to 24.23%, exacerbating the demand for immediate liquidity.

As consumer prices continue to increase, the Nigerians take more and more cash to meet the daily needs in an environment marked by the volatility of prices and the growing uncertainty.

In fact, many consumers continue to consider banking platforms as unreliable, citing frequent problems with bank transfers, inactivity times of the ATMs and delayed reversals.

Despite the growth of Fintech support and the government for electronic payments, the physical currency remains deeply incorporated into the economic and cultural fabric of the Nigerian company.

For a transition without cash to be successful, there must be significant progress in the construction of trust in digital systems, in the expansion of infrastructure and in the improvement of financial education.

This constant dependence on physical liquidity places significant challenges for Nigeria’s monetary policy.

The traditional liquidity management tools of the central bank, such as interest rates and open market operations, are made less effective when most of the currency remains non -banking.

Analysts are concerned that, unless decisive measures are taken to bring more currency into the banking system, the monetary policy of the nation can face a continuous tension, especially when inflation accelerates.

While the Central Bank’s monetary policy committee is preparing to meet in May 2025, experts expect a more failed position to face the growing liquidity challenges.

The need to increase excess liquidity or reintroduce more rigorous checks can become inevitable, further complicating the country’s journey towards a truly cashless economy.

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