CBN Successfully Mops Up N150bn Excess Cash in Access, Zenith, GTB, UBA, Other Banks via OMO Auction

• The CBN has successfully conducted OMO auctions, absorbing N150 billion from the economy
• This move is aimed at reducing money supply in the economy and tackling inflationary pressures
• As part of its money supply management, the CBN occasionally mop up or injects cash into the banking system through the sale or repayment of OMO, Treasury Bills

The Central Bank of Nigeria has continued its fight against inflation and the rising cost of goods and services.

The Apex bank, using the Open Market Operations (OMO) auctions, has mopped up N150 billion excess cash from the banking system in the first nine months of 2023.

OMO means the buying and selling of government security, which enables a central bank to control the supply of money in the banking system.

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The CBN sells OMO TBs to reduce money supply in the economy and with a view to curbing inflation.

But when the CBN wants to increase the money supply to spur economic growth, it repays the maturing OMO TBs with interest to the banks and the investors.

CBN OMO auctions activity

The CBN data on OMO TBs transactions show that it sold N150 billion from January to September, down from N830 billion sold in the corresponding period in 2022.

Also, the amount of matured OMO TBs repaid by the CBN fell by 82 per cent to N313.52 billion in 9 months of '23 from N1.741 trillion in 9 months of '22, Vanguard reports.

Consequently, the banking system recorded a net cash injection of N164 billion from OMO TBs in 9 months of '23, down from N911 billion in 9 months of '22.

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However, due to the sharp decline in cash mop-up by the CBN, the banking industry enjoyed a 46 per cent increase in average daily cash balance, which rose to N407.13 billion in 9 months of '23 from N214.87 billion in 9 months of '22.

CBN sets deadline

Meanwhile, in another report, the Central Bank of Nigeria (CBN ) has issued a 30-day ultimatum to Nigerian banks to close bank accounts without BVN.

According to the apex bank, the directive aims to promote safer, more reliable, and more efficient banking and payment systems.

Data from the NIBSS showed that 57.39 million customers’ accounts had been linked to their BVNs as of April 8, out of over 190 million bank accounts.

Source: Legit.ng