Money Supply in Nigeria rose to N93.72 trillion in January 2024
The Money and Credit Statistics from the Central Bank of Nigeria (CBN) show that Money Supply (M3) surged to N93.72 trillion in January 2024. This marks a 76 percent increase (N40.58 trillion) from N53.14 trillion in January 2023 and an 18 percent rise (N14.47 trillion) from N79.25 trillion in December 2023. Over the past 5 years, money supply has seen a 177 percent increase.
The recent surge is mainly due to the growth in net domestic assets, which rose by 23.14 percent and accounted for approximately 91.87 percent of the total money supply. Despite the challenges facing the economy, such as high inflation and exchange rate pressures, a continuous increase in money supply can have adverse effects. It can hinder efforts to control inflation and weaken consumer purchasing power. To mitigate these negative impacts, the Central Bank should implement Open Market Operations (OMO) and quantitative tightening measures by selling government securities and bonds.
A well-managed money supply is essential for economic stability and sustainable growth. Therefore, the CBN should closely monitor the level of money supply, particularly net domestic assets, to ensure it remains within desired economic boundaries. Additionally, the CBN should consider utilizing open market operations to address the situation.
