Currency outside banks rises 104% in 3 yrs — CBN
Currency Outside Banking System Increases Significantly as Demand Deposits Rise
By Peter Egwuatu
Nigerians’ preference for physical cash remains strong, with currency held outside the banking system rising sharply by 103.8% to N4.923 trillion in September 2026, compared to N2.416 trillion in September 2023. This increase underscores a persistent reliance on cash amid the growing availability of electronic payment options.
Data from the Central Bank of Nigeria (CBN) reflects a year-on-year increase in currency outside banks, climbing 10.3% from N4.465 trillion in September 2025 to the current figure. Over the past three years, the total currency outside the banking system has more than doubled, indicating significant demand for cash and highlighting challenges in promoting formal banking and digital payment solutions.
The data breakdown shows that currency outside banks increased by 66.2% from N2.416 trillion in September 2023 to N4.016 trillion in September 2024. This figure continued to rise to N4.465 trillion in September 2025, marking an 11.2% increase from the previous year, then further escalating to the current N4.923 trillion.
Analysts attribute the latest surge in cash holdings to robust consumer preference for cash transactions, even as mobile banking, electronic transfers, and point-of-sale terminals become more prevalent.
In a related development, demand deposits within the banking system also saw significant growth, rising 70.8% to N39.124 trillion in September 2026 from N22.903 trillion in September 2023. The CBN data indicates that demand deposits reached N31.842 trillion in September 2024, representing a 39.0% increase from the previous year. The figure continued to rise, reaching N34.642 trillion in September 2025, an 8.8% year-on-year increase before the latest rise to N39.124 trillion, reflecting a 12.9% increase over September 2025.
The increase in demand deposits signifies an expansion of funds accessible for payments and withdrawals through banking channels.
Clifford Egbomeade, an economic and communications expert, commented on the implications of these trends. He noted that the simultaneous rise in demand deposits and currency outside banks illustrates a dual reliance on both formal bank balances and substantial cash transactions within Nigeria’s payment system.
Egbomeade clarified that while these indicators are related to monetary activity, they measure different facets. Demand deposits denote bank-account balances, whereas currency outside banks represents cash in circulation beyond the banking system. He cautioned that interpreting the growth rates requires assessing various factors such as economic growth, inflation, informal transactions, and shifts in payment preferences.
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