In a significant financial development, Nigeria’s money supply has seen a substantial rise, surging by 48% to reach N107.7 trillion. The latest data from the Central Bank of Nigeria (CBN) highlights a notable increase from N72.8 trillion recorded at the same period in the previous year. This surge is primarily attributed to the country’s efforts to boost liquidity in the financial system and stimulate economic growth.
The rise in money supply encompasses a broad range of monetary aggregates, including currency in circulation, demand deposits, and other liquid assets within the banking system. Analysts have linked this sharp increase to various monetary policy adjustments, including recent efforts to stabilize the foreign exchange market and manage inflationary pressures.
Economists suggest that while an expanded money supply can support economic activities, it also presents challenges related to inflation control. Nigeria has been grappling with high inflation rates, which stood at 33.95% in May 2024. The increase in liquidity could further strain inflation control efforts unless effectively managed.
Furthermore, the ongoing structural reforms, particularly in the banking and finance sectors, have contributed to increased lending activities and investment opportunities, boosting overall economic confidence. However, the rise in money supply calls for vigilant oversight to ensure it translates into sustained economic growth without destabilizing price levels.
As Nigeria continues its pursuit of economic recovery and financial stability, policymakers will need to balance growth stimulation with inflation management to ensure long-term prosperity.
