The Central Bank of Nigeria (CBN) is under pressure to balance fiscal and monetary policies as the country faces shifting currency dynamics. Recent data shows that currency outside banks has surged by 119.3% between August 2023 and August 2026, according to the CBN’s Money and Credit Statistics. This increase highlights growing liquidity concerns, even as the bank’s reserves hit an 18-year high.
At the same time, the CBN has pledged to manage potential liquidity spikes ahead of the upcoming elections. The bank’s governor, Olayemi Cardoso, emphasized the need for closer coordination with the finance ministry to ensure stability. This comes as the CBN continues to monitor the impact of foreign exchange pressures, which have eased slightly but remain a key challenge.
The rise in currency outside banks suggests a shift in public trust or economic behavior, prompting the CBN to reassess its strategies. With reserves growing but liquidity risks increasing, the bank faces a delicate balancing act. The upcoming fiscal-monetary pact will be crucial in determining how effectively the CBN can address these evolving challenges.
