More Scarcity Ahead as CBN Moves to Mop Up Cash to Tame Inflation, Strengthen Naira
- The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has said the bank will embark on liquidity mop-up
- He said the move is to tame excess liquidity in the system and strengthen the value of the Naira
- Cardoso said the banks would be required to recapitalize to support the vision of a $1 trillion economy
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The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said on Friday, November 25, 2023, that the bank will introduce a set of foreign exchange rules to address the naira crash and achieve exchange rate stability.
Cardoso said the bank would conduct a new round of recapitalization exercises for the banking industry by asking banks to increase their minimum capital base to a new level to support the vision of a $1 trillion economy proposed by President Bola Tinubu.
Source: UGC
New licensing guidelines coming for banks, fintech firms
The CBN boss disclosed this in Lagos during his keynote speech at the 2023 Annual Bankers Dinner of the Chattered Institute of Bankers of Nigeria (CIBN).
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He said the the apex bank will introduce new licensing guidelines for fintech and payment banks, cautioning that operators engaging in activities outside their licenses will be sanctioned.
Vanguard reports that Cardoso said the bank will tighten the money supply for the next two quarters to curtail the challenge of surging inflation, adding that it will conduct another round of liquidity mop-up to reduce excess cash in the system.
Cardoso said:
“Our monetary policies will achieve price stability, foster sustainable economic growth, stabilize the Naira exchange rate, and reduce interest rates to facilitate borrowing and investments in the real sector.
"Clear, transparent, and harmonized rules governing market operations are essential to ensure the proper functioning of domestic and foreign currency markets.
“New foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and FX market operators before implementing new requirements.
Currency in circulation hits all-time high, returns to pre-Naira redesign periods
Legit.ng reported that data from the Central Bank of Nigeria shows that currency in circulation in Nigeria has increased to N2.299 trillion in October 2023, the highest since this year.
The amount represents 115.10% compared to the N1.39 trillion recorded in January this year and 8.33% higher than the N2.76 trillion in September.
In October last year, the apex bank withdrew the old N200, N500, and N1000 notes from circulation. It issued new designs, resulting in a temporary decline in currency in circulation as Nigerians exchanged their old naira notes for new ones.
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Source: Legit.ng
