Money Supply rose by 3.2% to N114.2 trillion in March 2025

The Central Bank of Nigeria’s (CBN) Money and Credit Statistics revealed that Money Supply (M3) increased to ₦114.2 trillion in March 2025. The figure represents a 3.2% rise from the ₦110.7 trillion recorded in February 2025 and a 24% increase from the ₦92.19 trillion recorded in the same month last year.

Additionally, data from the Central Bank show that the volume of currency circulating outside the banking system rose to ₦4.6 trillion in March, out of a total ₦5.0 trillion in circulation for the same month, indicating that 91.9% of all cash in the economy was held outside banks. This shows a deep dependence on physical currency, particularly within the informal economy.

The recent increase in money supply can be attributed to net foreign assets, which rose by 38.9% to ₦45.17 trillion, indicating strong capital inflows. This increase occurred despite aggressive monetary tightening by the CBN, which raised the Cash Reserve Ratio to 50 percent. A persistent rise in money supply has several negative implications for the economy, including delaying the achievement of inflation targets and complicating the CBN’s task of controlling inflation.

Moreover, rising liquidity, especially outside productive lending, could weaken the naira if inflation persists. Therefore, the CBN should enhance Open Market Operations (OMO) to mop up excess liquidity and closely monitor the volume of currency circulating outside the banking system to ensure it remains within economically sustainable limits.