Despite monetary tightening by the Central Bank of Nigeria (CBN), the money supply (M2), a monetary metric used by central banks to quantify the amount of cash in an economy, reached a record high of N96.96 trillion in April 2024.
From N93.97 trillion in February of the same year to N92.33 trillion in March of 2024, the M2 fell by 1.75 percent.
M2 increased dramatically by 74.26 percent in a single year, from N55.64 trillion in April 2023 to N96.96 trillion in April 2024, according to data from the CBN. The money supply increased by 5.01 percent monthly from N92.33 trillion in March 2024.
All cash on hand as well as funds deposited in checking and savings accounts as well as other short-term savings instruments like certificates of deposit (CDs) are included in the wide category known as M2. Generally, M2 does not include time deposits or retirement account balances over a specific level.
M2 is a tool used by economists to monitor the amount of money in an economy. Because it affects things like inflation and interest rates, this may be significant. For instance, inflation may result from the money supply expanding too quickly since there will be more money chasing fewer products and services.
Compared to M1, which solely counts cash in circulation, deposits made into checking accounts, and traveler’s checks, M2 is a more comprehensive measure of the money supply. M2 provides a more comprehensive view of the amount of money that is easily accessible for use in the economy.
Since Olayemi Cardoso became governor, the CBN has issued approximately N1.5 trillion in Open Market Operation (OMO) bills to control inflation and strengthen the naira, whose sharp depreciation has caused instability in the economy.
Money in circulation increased by 65.40%
According to the data, the amount of cash in circulation rose from N2.37 trillion in April 2023 to N3.92 trillion in April 2024, a 65.40 percent rise in just one year. The amount of money in circulation increased by 1.29 percent monthly from N3.87 trillion in March 2024.
The amount of currency outside of banks (COB) increased to N3.60 trillion in April 2024, up 73.91 percent from the N2.07 trillion recorded at the same time in 2023. The COB fell from N3.63 trillion in March 2024 by 0.83 percent every month.
Additionally, the data indicated that after declining the previous month, loans to the public and private sectors increased in April 2024.
In April 2024, the amount owed to the government rose to N19.97 trillion from N19.59 trillion in March of the same year, a 1.94 percent rise.
According to CBN data, credit to the private sector rose from N71.21 trillion in March 2024 to N7.92 trillion in April 2024, a 2.40 percent rise.
