BREAKING: Money supply in Nigeria tops N50 trillion in Oct 2022

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Data from the Nigerian central bank reveals that the money supply, also referred to as M2, is now at a record level of 50.5 trillion naira as of October 2022.

This is the highest level ever reported for one of the most important monetary statistics recorded by the central bank of Nigeria or any central bank in the world. The increase in the money supply was N1.26 trillion only in October, the third highest month after April and May this year.

The amount of money in circulation in the country has increased by N6.1 trillion only this year having closed in N44.4 trillion at the end of 2021. The increase is on track to beat the N6.6 trillion achieved in all of 2021.

Why this matters: An increase in the level of money supply in an economy is bound to generate two main actions.

  • It can help boost economic growth in the country, as an increase in the money supply in a depressed economy or recession is often seen as a remedy.
  • On the other hand, excessive growth in the money supply can trigger runaway inflation in any country, forcing a change in strategy.
  • While Nigeria has avoided a recession, the country is experiencing rising inflation, suggesting that excessive money supply is a major concern that requires an urgent solution.

What you should know: The amount of money on offer has accumulated over the years due in large part to CBN’s low interest policy (adopted to stimulate economic growth), trillions of naira in CBN intervention funds and CBN bailouts of the federal and state governments through their forms and means powers. The result is too much naira chasing dollars.

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  • The money supply is largely made up of currency outside banks, demand deposits at banks, and investments.
  • According to CBN data, quasi-money, which is money invested in liquid assets, is about N29.2 trillion.
  • Demand deposits, which are money held by banks on behalf of their clients, amount to about 18.4 trillion naira. Demand deposits contributed N3.3 trillion to the N6.1 trillion increase experienced this year.
  • The currency outside the banks is about N2.8 trillion.

Going up: The central bank’s monetary policy committee will meet on Monday and Tuesday 21st and 22North Dakota November respectively.

  • The main bank will likely respond to the latest NBS data which revealed an inflation rate above 21%.
  • The main bank will consider the increase in the money supply in any decision it makes at the committee meeting. As indicated, the money supply increased again in October despite efforts to curb it.
  • Nearly all of the 1.2 trillion naira increase in money supply in October came from near-money.
  • Responding to another episode of higher policy rates, as well as raising the CRR, should not be unexpected.

See the table:

The news continues after this announcement.


Money supply October 2022

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