Nigeria’s cash liquidity cycle showed signs of normalization in February 2026, as currency held outside the banking system moderated by 0.058% to N5.20 trillion, indicating decreasing demand for physical cash after the year-end spending surge.
This is according to the latest Money and Credit Statistics data published by the Central Bank of Nigeria (CBN), which also shows money supply declining significantly to N123.14 trillion in February, down from N 123.35 trillion in January.
The figures also showed that total currency in circulation remained broadly stable at N5.73 trillion, pointing to steady system-wide liquidity conditions even as excess cash returns to banks.
What the data is saying
According to the CBN’s Money and Credit Statistics, the moderation in cash outside banks follows months of elevated withdrawals driven by festive activities.
- While currency in circulation was largely unchanged at N5.73 trillion in February compared to N5.732 trillion in January, the drop in out-of-bank cash suggests a gradual return of liquidity into the formal financial system.
- Currency outside banks declined by 0.058% month-on-month to N5.20 trillion in February 2026.
- The metric had previously peaked at N5.41 trillion in December 2025 amid heightened festive spending.
- The reduction reflects households and businesses redepositing excess cash after the holiday season.
- The trend highlights a typical seasonal pattern of increased cash demand at year-end followed by moderation.
This pattern underscores how cash usage in Nigeria tends to spike during festive periods before easing as economic activity stabilizes in the new year.
More insights
A closer look at historical data reveals a steady build-up in cash holdings during the final quarter of 2025.
- Currency outside banks rose from N4.65 trillion in October to N4.91 trillion in November, before climbing sharply to N5.41 trillion in December due to increased retail spending and withdrawals.
- In the second half of 2025, cash outside banks declined from N4.63 trillion in May to N4.42 trillion in July.
- It later edged up slightly to N4.46 trillion in August, reflecting gradual rise in cash demand.
- The first quarter of 2025 recorded relatively stable levels, fluctuating between N4.51 trillion and N4.74 trillion.
- Despite the February 2026 decline, cash remains widely used, especially in Nigeria’s informal sector.
The data reinforces the entrenched role of physical cash in the economy, even as digital payment channels continue to expand.
What you should know
Recent trends show that the moderation in cash outside banks is part of a broader post-festive liquidity adjustment cycle within Nigeria’s financial system.
- January 2026 had already recorded a similar easing, from N5.40 trillion in December to N5.21 trillion in January, setting the stage for February’s continued decline.
- February’s 0.058% drop to N5.20 trillion builds on January’s earlier moderation in out-of-bank cash levels.
- The trend reflects easing liquidity pressures after year-end spending spikes.
- It aligns with broader monetary patterns where excess liquidity gradually flows back into banks.
- Improved liquidity recycling supports financial intermediation and monetary policy effectiveness.
The continued normalization suggests that while cash remains dominant in many segments, Nigeria’s liquidity cycle is stabilizing, with excess funds steadily returning to the banking system after seasonal surges.
