CBN Reports Nigeria’s Money Supply Falls to ₦123.36tn

Overview of Nigeria’s Money Supply in January 2026

Nigeria’s total money supply, measured as M3, experienced a minor decline in January 2026, falling to ₦123.36 trillion from ₦124.4 trillion in December 2025. This slight reduction indicates a modest decrease in the amount of money circulating within the financial system at the beginning of the year. The drop comes as a result of the Central Bank of Nigeria (CBN) implementing measures to tighten monetary conditions and reduce excess liquidity.

The CBN has been employing various tools to manage the flow of money in the economy. These include Open Market Operations (OMO) and the sale of Treasury bills, which are aimed at removing surplus cash from the banking system. These actions are part of the bank’s broader strategy to control inflation and maintain stability in the foreign exchange market.

Understanding M3 and Its Components

M3 is a comprehensive measure of the total liquidity in the economy. It includes cash in circulation, demand deposits, savings deposits, time deposits, and foreign currency deposits. This broad definition allows for a more accurate assessment of the overall money supply and its impact on economic activity.

According to the latest report, there were mixed changes in the components of the money supply. One notable change was the sharp decline in net foreign assets, which dropped to ₦29.6 trillion. This reflects a reduction in foreign currency holdings within the financial system. However, net domestic assets increased to ₦93.76 trillion, primarily due to sustained growth in lending and credit within the country.

Domestic Credit Growth and Economic Implications

Analysts from Norrenberger Research highlighted that the contrasting movements between foreign and domestic assets illustrate how domestic credit growth is playing a key role in maintaining the overall money supply. Even as foreign assets decline, the increase in domestic assets suggests that local lending activities are compensating for this loss.

Despite the month-to-month decrease in M3, the total money supply remains significantly higher than it was during the same period last year. This indicates that liquidity in Nigeria’s economy is still relatively high, which can have both positive and negative implications for inflation and economic growth.

Monitoring Monetary Policy Effectiveness

Economists emphasize that fluctuations in the money supply will continue to be closely monitored. These changes provide valuable insights into the effectiveness of the CBN’s monetary tightening policies. The central bank’s efforts to manage inflation, stabilize the exchange rate, and support broader economic conditions are critical for ensuring long-term financial stability.

The CBN’s approach to controlling liquidity through OMO and other instruments demonstrates its commitment to maintaining a balanced economic environment. However, the challenge lies in striking the right balance between reducing excess liquidity and avoiding excessive tightening that could stifle economic growth.

Future Outlook

As the CBN continues to refine its monetary policies, the focus will remain on achieving sustainable economic growth while keeping inflation under control. The interplay between domestic and foreign assets will likely play a significant role in shaping future monetary strategies.