The Central Bank of Nigeria (CBN) withdrew N13.41 trillion from the financial system in January 2026, nearly five times the N2.77 trillion removed in the same month last year, according to the Monetary and Credit Statistics published by the Financial Markets Dealers Association (FMDA).
The figures show a broad-based contraction in liquidity, reflecting the apex bank’s aggressive tightening stance at the start of the year. Broad Money (M3) fell by 0.8% month-on-month to N123.36 trillion from N124.41 trillion in December 2025, while Narrow Money (M2) declined to N123.35 trillion from N124.40 trillion.
Private sector credit also moderated by 0.8%, falling to N75.24 trillion from N75.83 trillion, while credit to government edged lower to N34.19 trillion from N34.22 trillion. Bank reserves dropped by 5.5% to N30.26 trillion, showing the direct effect of the liquidity mop-ups.
The contraction follows an expansionary cycle in December 2025, when currency in circulation spiked. Analysts say the move underscores the CBN’s ongoing sterilisation drive to tighten liquidity and curb inflationary pressures.
Despite the January squeeze, the Monetary Policy Committee (MPC) reduced the benchmark rate from 27% to 26.5% on February 24, suggesting the peak of monetary tightening may have passed. Experts expect liquidity conditions to improve and credit activity to respond positively from March 2026 onward.
The FMDA is a professional body representing dealing members from commercial banks and other authorized financial institutions active in Treasury bills, bonds, foreign exchange, money market instruments, and other fixed-income securities.
