In response to the persistent challenges of inflation and the need for a robust economic foundation, the Central Bank of Nigeria (CBN) is set to implement strategic measures aimed at stabilizing the naira and achieving exchange rate stability.
CBN Governor, Olayemi Cardoso, announced the upcoming introduction of a set of foreign exchange rules during a press briefing on Friday. Cardoso emphasized the necessity of addressing the naira’s recent decline to support the vision of a $1 trillion economy proposed by President Bola Tinubu.
As part of these measures, the CBN will conduct a new round of recapitalization exercises for banks, requiring them to elevate their minimum capital base to a new level.
In a keynote speech at the 2023 Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, Cardoso revealed that new licensing guidelines would be introduced for fintech and payment banks. He cautioned against activities outside their licensed scope, warning of sanctions for non-compliance.
Cardoso outlined the CBN’s intention to tighten the money supply over the next two quarters to address the challenge of surging inflation. Another round of liquidity mop-up is on the horizon, aimed at reducing excess cash in the system. He stated:
“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.”
To ensure transparent and effective market operations, Cardoso emphasized the importance of clear rules governing domestic and foreign currency markets. He revealed plans for the development of new foreign exchange guidelines and legislation, with extensive consultations with banks and FX market operators preceding their implementation.
Meanwhile, recent data from the Central Bank of Nigeria indicates a surge in currency in circulation, reaching N2.299 trillion in October 2023. This marks the highest level this year, representing a 115.10% increase compared to January and an 8.33% rise from September figures.
This move comes after the apex bank’s redesign of the Naira last October, withdrawing old denominations and issuing new designs. The resulting increase in currency in circulation reflects a return to pre-redesign periods as Nigerians exchanged old notes for new ones.
