Nigeria’s money supply has surged to N114.22 trillion as of March 2025, marking a 24% increase from the same period last year. This growth persists despite the Central Bank of Nigeria's (CBN) stringent monetary policies, including a 50% Cash Reserve Ratio (CRR) and high interest rates.
HIGHLIGHTS:
- Broad Money Supply Growth: The money supply expanded by 3.2% month-on-month and 24% year-on-year.
- Foreign Assets Surge: Net foreign assets rose by 38.9% to N45.17 trillion, indicating stronger capital inflows.
- Currency Outside Banks: N4.6 trillion of the N5 trillion in circulation is held outside the banking system, reflecting a 26.7% increase from March 2024.
- Domestic Credit Decline: Net domestic assets decreased by 11.7% to N69.05 trillion, suggesting tighter liquidity within the domestic financial system.
- Upcoming MPC Meeting: The CBN's next Monetary Policy Committee meeting is scheduled for May 19–20, 2025.
Despite the CBN's aggressive policies to control inflation and liquidity, the significant rise in money supply suggests that these measures are not fully effective. The substantial amount of currency circulating outside the banking system indicates a lack of public confidence in the formal financial sector. This situation could lead to challenges in controlling inflation and managing economic stability.
As the CBN prepares for its next policy meeting, the effectiveness of its strategies to manage liquidity and inflation remains uncertain. What steps do you think the CBN should take to address these challenges? Share your thoughts with us.
