Liquidity in Kenya’s financial system has surpassed KSh6 trillion, with broad money (M3) reaching KSh6.03 trillion in December 2025, the highest level on record.
- •The figure marks a sharp increase in the scale of liquidity circulating through the economy with the broad money rising from KSh3.99 trillion in December 2020 to KSh6.03 trillion in December 2025
- •Money supply expanded steadily in 2021 and 2022 before surging sharply in 2023, when broad money jumped from KSh4.53 trillion to KSh5.50 trillion, an increase of nearly KSh1 trillion in a single year.
- •Growth then slowed in 2024 before accelerating again in 2025 to push the system above the KSh6 trillion threshold.
Broad money is the widest measure of liquidity circulating within an economy. The Central Bank tracks three monetary aggregates: M1, M2 and M3, each capturing progressively broader layers of money within the financial system.
M1, the narrowest measure of money, includes currency outside banks and demand deposits held in commercial banks. These balances represent the most liquid funds used for everyday transactions. By December 2025, M1 stood at KSh2.41 trillion, marking a 13.4% year on year increase and a 30% rise from about KSh1.85 trillion in December 2021.
M2 expands this measure by adding savings and time deposits, which represent funds held within banks but not typically used for immediate payments. By the end of 2025, M2 had reached KSh4.68 trillion, reflecting 10.7% annual growth and an increase of about 30% from KSh3.61 trillion in December 2022.
M3, the broadest monetary aggregate used by the Central Bank, includes M2 together with foreign currency deposits held in domestic banks. By December 2025, M3 stood at KSh6.03 trillion, representing 9.8% year on year growth and a 51% expansion from roughly KSh3.99 trillion in December 2020. Foreign currency deposits reached KSh1.35 trillion, accounting for more than 22% of total money supply.
The expansion of money supply has been supported largely by rising credit within the banking system. Domestic credit reached KSh6.43 trillion in December 2025, net credit to government stood at KSh2.29 trillion, while lending to the private sector reached KSh4.09 trillion.
The steady increase in government borrowing alongside gradual recovery in private sector lending has expanded bank balance sheets and injected liquidity into the economy.
External balances have also strengthened over the past two years with net foreign assets rose to KSh1.18 trillion in December 2025.
Overall liquidity in the financial system, which includes broad money together with non bank holdings of government securities, reached KSh10.29 trillion by the end of 2025.
