The Central Bank of Nigeria (CBN) said that its monetary policies and actions have stimulated growth and stability of the nation’s economy in Abuja on Friday.
According to the CBN governor, Olayemi Cardoso, Nigerias will experience better days as a result of the positive indicators.
Speaking during an engagement with the Senate Committee on Banking, Insurance, and other Financial Institutions in Abuja, Cardoso highlighted various positive indicators, including:
– A significant narrowing of the spread between official and BDC rates, indicating successful price discovery and reduced arbitrage opportunities.
– An increase in external reserves to $36.89 billion as of July 16, driven largely by receipts from crude oil-related taxes and third-party receipts.
– A current account surplus and improvements in trade balance in the first quarter of 2024.
– A robust and diverse banking sector, with key indicators such as capital adequacy, liquidity, and non-performing loan ratios showing impressive improvements.
– An impressive performance in the equity market, with the All-Share Index rising by 33.81% and market capitalization expanding by 38.33% from December 2023 to June 2024.
Cardoso assured the committee that the CBN remains vigilant and committed to implementing policies that support sustainable growth in the financial markets while maintaining ovemmittee that the CBN remains vigilant and committed to implementing policies that support sustainable growth in the financial markets while maintaining overall economic stability. He also highlighted measures to combat inflation.
He said, “To combat inflation, we have implemented a comprehensive set of monetary policy measures.
“These include raising the policy rate by 750 basis points to 26.25 per cent, increasing cash reserve ratios, normalising open market operations as our primary liquidity management tool.
“And adopting Inflation Targeting as our new monetary policy framework.”
Additionally, Cardoso highlighted the CBN’s efforts in banking supervision, including decisive actions to ensure the safety, soundness, and the resilience of the banking industry.
He said that key measures included intervention in three banks, revocation of Heritage Bank’s license, increasing minimum capital requirements, and enhancing AML/CFT supervision.
“We also introduced new frameworks for Cash Reserve Requirements and cybersecurity and prohibited the use of foreign currency collaterals for local currency loans,” he said.
Cardoso said that CBN was in the process of reviewing micro and macro prudential guidelines to reinforce the resilience of financial institutions to withstand tightened conditions, thereeby creating a secure and attractive investment climate.
He said ,“We have signaled our plans to re-capitalise deposit money banks in Nigeria to improve capital inadequacy and their capacity to grow the economy.
“Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices.”
The chairman of the Committee, Sen. Adetokunbo Abiru, commended the CBN for its efforts and stressed on the importance of monetary policy in maintaining economic stability.
