Governor of Central Bank of Nigeria, CBN, Mr Yemi Cardoso
said yesterday that the apex bank will soon introduce a new set of foreign
exchange laws and guidelines to address naira depreciation and achieve exchange
rate stability.
The CBN, according to him, will also conduct a new
recapitalisation exercise for the banking industry, by directing banks to
increase their minimum capital base to a level sufficient to support the vision
of a $1trillion economy.
Cardoso disclosed this in Lagos in a keynote speech at the
2023 Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria,
CIBN.
Cardoso also disclosed that the CBN will introduce a new
licensing framework for fintechs and payment banks, warning that operators
found engaging in activities outside their licenses will be sanctioned.
Citing the need to curtail the challenge of rising
inflation, Cardoso said the apex bank will further tighten money supply for the
next two quarters. He added that to further reduce excess cash in the banking
system the management of the CBN has approved and will soon conduct another
round of liquidity mop up via issuance of Open Market Operations, OMO, treasury
bills.
His words:
“Our monetary policies will aim to achieve price stability,
foster sustainable economic growth, stabilize the exchange rate of the naira,
and reduce interest rates to facilitate borrowing and investments in the real
sector. In order to ensure the proper functioning of domestic and foreign
currency markets, clear, transparent, and harmonized rules governing market
operations are essential. “New foreign
exchange guidelines and legislation will be developed, and extensive
consultations will be conducted with banks and FX market operators before
implementing any new requirements.
“Considering the policy imperatives and the projected
economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the
envisioned larger economy. It is not just about the stability of the financial
system in the present moment, as we have already established that the current
assessment shows stability. “However, we need to ask
ourselves: Will Nigerian banks have sufficient capital relative to the
financial system’s needs in servicing a $1.0 trillion economy in the near
future? In my opinion, the answer is “No!” unless we take
action. “Therefore, we must make difficult decisions regarding capital
adequacy. As a first step, we will be directing banks to increase their
capital.”
On new licensing framework for fintechs, Cardoso said:
“Technology will continue to play a critical role in delivering financial services
and enhancing financial inclusion.
“However, recent
developments in the payment services landscape have raised
concerns regarding the use of technology and the existing licensing and
regulatory framework. We have observed that some licensees are operating
outside the approved activities, breaching the boundaries set for them. “Any
intentional or unintended noncompliance will be subject to sanctions, as
operators have the responsibility to ensure that they are licensed for the
activities they undertake. “Concurrently, as we conduct a comprehensive review
of the licensing framework for payment services, we will engage in extensive
consultations to develop a new regulatory and compliance framework that is
suitable for the technology-driven payment services sector.”
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