The Central Bank of Nigeria (CBN) has said the money supply, also known as M3, declined by 0.43 percent over the span of one month.
According to the CBN’s report, money supply dropped from N56.04 trillion in April 2023 to N55.80 trillion in May 2023, reflecting a downward trend in the country’s overall monetary situation.
In addition to the decline in money supply, the data from the CBN revealed a decrease in credit to the government.
The credit extended to the government experienced a decline of 0.22 percent, falling to N30 trillion in May 2023 compared to N30.76 trillion recorded in the previous month.
While the overall money supply and credit to the government experienced declines, there was a notable increase in currency in circulation.
The amount of currency in circulation rose by 6.32 percent, reaching N2.52 trillion in May 2023 from N2.37 trillion in April of the same year.
This rise in physical currency could indicate a shift in consumer behavior towards using cash for transactions or a potential increase in the demand for liquidity in the economy.
The decline in money supply could have various implications for the Nigerian economy. A decrease in money supply may signify reduced liquidity and could impact borrowing, spending, and overall economic growth.
It could also reflect tighter monetary policies by the CBN to control inflation and stabilize the currency.
The CBN plays a critical role in managing the country’s monetary policies and ensuring the stability of the financial system. As part of its mandate, the central bank monitors key indicators such as money supply, credit to the government, and currency in circulation to make informed decisions that support the overall health of the economy.
