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CBN sterilises N3.57 trillion within three days as deposit money banks deposited excess liquidity into the Standing Deposit Facility. The action reflects stronger monetary tightening measures by the Central Bank of Nigeria to regulate money supply, stabilise the financial system, and control inflation.
Financial data shows that rising liquidity in Nigeria’s banking sector prompted aggressive intervention by the apex bank. The development highlights ongoing efforts to manage surplus cash and maintain price stability in the economy.
Why CBN Sterilises N3.57 Trillion Through Standing Deposit Facility
The Standing Deposit Facility is a financial window where banks place excess funds with the central bank to earn interest on idle cash. The facility provides an overnight interest rate of about 22.8 percent, making it attractive for banks seeking safe returns.
When CBN sterilises N3.57 trillion through this facility and other instruments, it reduces the amount of money circulating in the economy. This helps to control inflation and prevent excessive liquidity from weakening monetary policy goals.
Between February 17 and February 19, 2026, the central bank intensified liquidity management operations through Open Market Operations, treasury bill sales, bond issuances, and large scale bank deposits.
How CBN Sterilises N3.57 Trillion in Three Days
Data from financial market activities shows that the central bank absorbed more than N3.57 trillion through multiple channels, signalling a firm response to rising liquidity levels.
Banking System Liquidity Remains Strong
Liquidity in the banking system stayed elevated during the week, closing at N4.32 trillion. Deposits in the Standing Deposit Facility increased sharply from N2.52 trillion at the start of the week to N4.26 trillion.
Banks maintained daily deposits close to N3 trillion, including N3.35 trillion on February 17 and about N2.97 trillion on February 19. This sustained activity explains how the CBN sterilises N3.57 trillion within a short period.
Treasury Bills and Open Market Operations
The central bank recorded net liquidity absorption of about N435 billion on February 17 after Open Market Operations sales of N2.30 trillion were partly offset by N1.87 trillion in maturities.
On February 19, treasury bills and bond sales totalled N1.91 trillion against repayments of N765.89 billion. This resulted in net liquidity absorption of approximately N1.14 trillion.
Combined market instruments accounted for about N1.57 trillion in withdrawals, while continued Standing Deposit Facility placements strengthened total liquidity control.
Expert Views on Why CBN Sterilises N3.57 Trillion
Financial analysts say high liquidity reflects structural and fiscal factors rather than financial instability in the banking sector.
Analysts at Coronation Research noted that system liquidity strengthened significantly during the week, with rising Standing Deposit Facility placements showing increased surplus reserves.
Olubunmi Ayokunle of Augusto & Co explained that liquidity growth is linked to government spending and economic recovery trends.
Experts identified key drivers of excess liquidity:
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High federal allocations to states and local governments
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Effects of previous central bank financing to government
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Increased infrastructure and economic spending
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Gradual economic recovery and financial activity
Public funds released into the economy often return to the banking system, increasing available liquidity.
Economic Impact as CBN Sterilises N3.57 Trillion
When CBN sterilises N3.57 trillion, the policy has broader effects on the financial system and economic growth.
Inflation Control and Price Stability
Liquidity absorption helps stabilise prices by reducing excess cash in circulation. The policy supports the central bank’s inflation control strategy and strengthens monetary tightening efforts.
Higher Borrowing Costs and Credit Risks
Sustained liquidity mop up operations may increase borrowing costs. High yield government securities also encourage banks to invest in risk free instruments rather than expand private sector lending.
This could slow credit growth in the real economy even though it strengthens financial stability.
Long Term Implications of CBN Sterilises N3.57 Trillion Policy
The decision as CBN sterilises N3.57 trillion reflects a balance between controlling inflation and supporting economic recovery. While the policy ensures financial stability, continuous liquidity management requires careful monitoring to avoid weakening economic growth.
The central bank continues to manage surplus liquidity through market operations and bank deposits, reinforcing its commitment to maintaining a stable monetary environment in Nigeria’s financial system.
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