Nigeria’s banking system is heading into another significant liquidity build-up, with about N2.59tn expected to enter the financial system this week as Open Market Operations (OMO) bills mature and bond coupon payments are made.
The development could push total system liquidity to approximately N8.57tn, placing renewed pressure on the Central Bank of Nigeria (CBN) to absorb excess funds while maintaining its recently eased monetary policy stance.
According to financial data from the CBN, system liquidity increased sharply to N5.98tn in the week ended September 25, 2026, compared with N2.86tn recorded the previous week.
The increase followed the repayment of approximately N2.3tn in OMO bills on September 22, which released substantial funds back into the banking system.
Another N2.43tn in OMO bills is scheduled to mature this week, while bond coupon payments are expected to inject an additional estimated N164bn. If banks retain most of the incoming funds, the combined effect could lift available system liquidity to about N8.57tn.
The latest liquidity build-up comes at a particularly important point for Nigeria’s monetary policy.
The CBN’s Monetary Policy Committee, at its September 21–22 meeting, reduced the Monetary Policy Rate from 26.5 per cent to 23 per cent, representing a 350-basis-point cut. The committee also recalibrated the Standing Facilities Corridor around the new policy rate.
The rate reduction has already begun to filter through the money market. The overnight rate fell to 20.77 per cent, from 22.24 per cent, while the funding rate declined to 20.40 per cent from 22 per cent.
Banks are also demonstrating the extent of surplus funds available to them. More than N7tn was placed with the CBN through its Standing Deposit Facility during the past week, indicating that financial institutions have considerable cash that has not been deployed into loans or other investments.
The expected liquidity injection could therefore force the apex bank to consider additional sterilisation measures, particularly through OMO sales.
The CBN has already demonstrated its willingness to intervene. At its September 24 OMO auction, the apex bank offered N1tn worth of securities but received subscriptions of about N6.1tn, eventually allotting N2.3tn. The strong demand came despite declining yields following the monetary policy easing.
Meanwhile, Treasury bill yields have also fallen. The average Nigerian Treasury Bills yield declined by 90 basis points to 17.89 per cent, while stop rates at the latest auction stood at 15.50 per cent for the 91-day bill, 15.80 per cent for the 182-day instrument and 15.89 per cent for the 364-day bill.
The liquidity surge presents both opportunities and challenges for the financial system.
Greater availability of funds could ease short-term funding conditions and put further downward pressure on money-market rates. However, excessive liquidity can complicate the CBN’s efforts to manage inflationary pressures and maintain orderly financial-market conditions.
For the apex bank, the immediate challenge will be balancing its new lower-interest-rate environment with the need to prevent a large volume of idle cash from destabilising monetary conditions.
The coming weeks will therefore provide an important test of how the CBN manages liquidity under its newly recalibrated monetary policy framework.
