The Central Bank of Nigeria (CBN) has announced its plans to introduce a new set of foreign exchange (FX) laws and guidelines to tackle the depreciation of the naira and ensure exchange rate stability.
The CBN Governor, Mr Yemi Cardoso, who disclosed this in a keynote speech at the 2023 Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos yesterday, also said the apex bank will conduct a new recapitalization exercise for the banking industry by asking banks to raise their minimum capital base to a level that can support the vision of a $1 trillion economy.
Cardoso further revealed that the CBN will issue a new licensing framework for fintechs and payment banks, and warned that any operator found violating the approved activities will face sanctions.
He also said the apex bank will tighten money supply for the next two quarters to curb the challenge of rising inflation.
The CBN Governor added that the CBN management has approved and will soon carry out another round of liquidity mop up through the issuance of Open Market Operations (OMO) Treasury bills to reduce excess cash in the banking system.
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He said, “Our monetary policies will aim to achieve price stability, foster sustainable economic growth, stabilise the exchange rate of the naira, and reduce interest rates to facilitate borrowing and investments in the real sector. To ensure the proper functioning of domestic and foreign currency markets, clear, transparent, and harmonised rules governing market operations are essential. New FX 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 the 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 non-compliance 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.” #CBN