Cash Hoarding Rises As Currency Outside Banks Hits ₦4.65 Trillion

NIGERIA’S demand for physical cash surged again in October, with Currency Outside Banks (COB) climbing to ₦4.65 trillion — its highest level in months — despite the Central Bank of Nigeria’s renewed monetary tightening. The latest Money and Credit Statistics show a 4.07% increase from September’s ₦4.47 trillion, adding ₦181.71 billion to cash circulating outside the formal banking system.

The rise marks the second consecutive monthly increase, following a small uptick of ₦14.73 billion in September after COB fell by ₦43.44 billion between June and August. Throughout 2024 and 2025, COB has oscillated around the ₦4.5 trillion mark, after dropping from ₦5.13 trillion in December 2024.

Currency in Circulation (CIC) also grew, reaching ₦5.06 trillion in October — a 2.12% increase from September. CIC has remained steady around the ₦5 trillion range all year, though still below the ₦5.44 trillion reported at the end of 2024.

Beyond cash usage, credit dynamics also shifted. Private-sector credit rose by 2.60% to ₦74.41 trillion in October, though year-on-year figures show a slight dip of 0.46%. Government borrowing grew marginally as well, with net credit rising to ₦24.79 trillion, even as annual figures reflect a steep 37.07% decline from October 2024.

Economists warn that rising physical cash poses risks to monetary policy. High cash outside banks weakens the CBN’s control over liquidity, limits banks’ deposit pools, fuels informal transactions, and complicates inflation management — especially as the apex bank works to rein in price pressures.

The surge comes amid mixed policy signals from the Monetary Policy Committee. In September, the MPC cut the Monetary Policy Rate by 50 basis points — the first reduction since 2020 — following signs of easing inflation. But in November, the committee held the rate at 27% and tightened the policy corridor to discourage banks from parking liquidity at the CBN.

The renewed rush for cash suggests growing distrust in banking access, lingering effects of past currency shortages, and persistent reliance on cash-based transactions across households and businesses.