More than nine out of every 10 naira in circulation was held outside the banking system in May, highlighting the loosening grip of cash on the economy despite sustained efforts by regulators and financial institutions to attract cash deposits.

The updated Money and Credit Statistics released by the Central Bank of Nigeria (CBN) showed that currency held outside banks rose to N5.19 trillion in May, up from N5.08 trillion recorded in April.

The figure represents an increase of N109.34 billion within a month and N559.16 billion above the N4.63 trillion held outside banks in the corresponding period last year.

The data showed that cash outside the banking system accounted for 91.27 per cent of total currency in circulation in May, compared with 90.03 per cent a month earlier.

In practical terms, this means that only a small fraction of the country’s cash balances is being held within the formal banking system, while the overwhelming majority remains in the hands of households, businesses and operators in the informal economy.

The development comes at a time when authorities are intensifying efforts to migrate economic activities to electronic channels through bank transfers, mobile money services, agent banking networks and fintech platforms.

Figures from the apex bank also showed that total currency in circulation rose to N5.69 trillion in May from N5.65 trillion in April, representing a moderate monthly increase of N43.59 billion. Compared with May 2025, currency in circulation expanded by N675.19 billion or 13.46 per cent.

The latest numbers suggest that while digital payment channels continue to expand, cash remains deeply embedded in everyday commercial activities, particularly in retail transactions, transportation, informal trade and rural markets.

The trend was further reflected in banking system liquidity, with reserves held by deposit money banks at the CBN declining during the month. Bank reserves fell from N34.60 trillion in April to N33.76 trillion in May, a decrease of N840.77 billion or 2.43 per cent.

Although the reserve position weakened on a month-on-month basis, it remained stronger than a year earlier. Bank reserves stood at N2.9 trillion above the N30.87 trillion recorded in May 2025, representing an annual growth of 9.39 per cent.

The figures underscore the challenge facing policymakers as they seek to build a more technology-driven payments ecosystem while large segments of the economy continue to rely heavily on physical cash.

Speaking recently at the launch of the Nigeria Payment System Vision (PSV) 2028 in Abuja, CBN Governor Olayemi Cardoso said the initiative is designed to build on the country’s progress in digital payments and accelerate the transition to a more inclusive, technology-driven financial system.

According to him, the CBN aims to reduce currency held outside the banking system to less than 40 per cent of total currency in circulation, a target that remains far from current levels.

Cardoso added that more than 10 million QR-code and tap-to-pay acceptance points are expected to be deployed across markets, transport hubs, rural communities and commercial centres nationwide as part of efforts to deepen electronic payment adoption.