Cash held outside Nigeria’s banking system rose in September as broad money supply expanded, reflecting an increase in currency holdings by the public amid a surge in overall monetary aggregates, according to data from the Central Bank of Nigeria (CBN) and the Financial Markets Dealers Association (FMDA).
Currency outside banks rose by 1.00 percent to N4.92 trillion in September 2026, from N4.87 trillion in August, while currency in circulation increased by 1.50 percent to N5.52 trillion from N5.44 trillion over the same period.
The increase came as broad money supply, measured by M3, rose by 5.40 percent month-on-month to N146.60 trillion in September, from N139.09 trillion in August, according to the CBN’s September 2026 Monetary and Credit Statistics.
Narrow money supply, M2, which excludes CBN bills held by the non-bank public from the broader M3 measure, increased by 1.38 percent to N141.00 trillion during the month.
The figures indicate that cash holdings outside banks increased alongside the expansion in money supply, although the data do not establish whether the rise resulted from increased household spending, business transactions or other factors.
The FMDA attributed the stronger growth in M3 largely to a surge in CBN bills held by the non-bank public, which rose to N5.60 trillion in September. The association noted that this was the highest level since December 2019, following the reopening of open market operations to local investors in August.
The increase in M3 therefore reflected, in part, the contribution of these bills to broad money growth rather than an equivalent expansion in cash available for spending.
Meanwhile, net domestic assets rose by 11.97 percent to N115.70 trillion in September, from N103.34 trillion in August, while net foreign assets declined by 13.57 percent to N30.90 trillion from N35.75 trillion.
Credit to the government also rebounded by 19.26 percent to N39.40 trillion, ending a three-month decline. In contrast, private-sector credit eased by 0.64 percent to N83.93 trillion from N84.47 trillion in August, although it remained 15.73 percent higher year-on-year.
The divergence between government and private-sector credit comes after the CBN cut its monetary policy rate by 350 basis points to 23 percent in September, in a move aimed at easing monetary conditions following progress in reducing inflation.
However, the September figures suggest that the effects of monetary easing on credit conditions may take time to emerge, as private-sector credit declined during the month even as overall money supply expanded.
The FMDA noted that open market operation yields of between 16 percent and 19 percent continued to offer banks an attractive, relatively low-risk alternative to lending. It said a firmer lending response was more likely in the fourth quarter as monetary policy rates eased.
The latest data highlight the importance of distinguishing between growth in monetary aggregates and the availability of funds for productive economic activity. While rising cash outside banks may reflect changes in how individuals and businesses hold money.